Vietnam factory growth quickens as hiring resumes after 4-month slump
Export orders rose at its fastest pace since 2024.
Vietnam's manufacturing sector picked up pace in July, with output, new orders and exports all growing more strongly and employment rising for the first time in five months, according to the latest S&P Global survey.
The headline Vietnam Manufacturing Purchasing Managers' Index rose to 52.9 in July from 51.8 in June, marking the sector's strongest monthly improvement since February and extending an unbroken run of expansion to 13 consecutive months.
Manufacturing production accelerated to a five-month high, continuing an unbroken monthly rise in output stretching back to May 2025. Firms linked the pickup largely to stronger new orders, which grew for a third straight month at a faster pace than in June, with new export orders rising at their sharpest rate since July 2024.
Much of the improvement reflected easing price pressures. Whilst some firms continued to report higher shipping and fuel costs, a recent dip in oil prices allowed others to make savings, leaving both input costs and output prices rising at their slowest pace since September 2025. Supply-chain strain also eased, with supplier delivery times lengthening at their least pronounced rate since May 2025.
Manufacturers stepped up purchasing at the fastest pace in almost four-and-a-half years, driven mainly by higher output needs, with some firms buying ahead for future use. Stocks of both inputs and finished goods fell markedly as materials were drawn down to support rising production and goods were shipped out to meet order demand.
Firms also began hiring again for the first time in five months, though the pace of job creation was not enough to prevent a further build-up in backlogs amid strong order growth.
Business confidence rose to a five-month high on hopes of continued order growth and plans to expand capacity, though sentiment remained well below levels seen before the outbreak of the Middle East conflict, with some firms flagging the risk that geopolitical tensions could yet limit growth.
Andrew Harker, economics director at S&P Global Market Intelligence, said the second half of the year had begun strongly, with July's data pointing to improving momentum across Vietnam's manufacturing sector.
He said softer inflation and stronger demand, including from abroad where growth had been muted until July, had allowed firms to secure more new work, giving manufacturers enough confidence to resume hiring whilst ramping up production and purchasing.
He added that business sentiment remained below pre-war levels, and that the sector's prospects for the rest of the year would likely stay closely tied to geopolitical developments.
