Vietnam Manufacturing Maintains expansion streak even as PMI falls in June

Inflation eased sharply whilst jobs kept falling.

Vietnam’s manufacturing sector kept up its run of expansion in June, as fresh gains in new orders and a marked cooling of price pressures underpinned a strong month for the country’s goods producers.

Purchasing activity also picked up during the month, though continuing delays in supply chains left stocks of inputs sharply depleted. Staffing levels fell further too, amidst persistent signs of spare capacity across the sector.

The seasonally adjusted S&P Global Vietnam Manufacturing Purchasing Managers’ Index posted 51.8 in June, down from 52.8 in May but still above the 50.0 no-change mark and therefore pointing to an improvement in the health of the sector. Business conditions have now strengthened on a monthly basis throughout the past year.

New export orders inch higher

Having returned to growth in May, new orders rose again in June as firms reported stronger customer demand, though the latest upturn was somewhat softer than the month before. Export orders also increased, but only modestly and by less than total new business overall.

That rise in new orders helped sustain growth in factory output, which increased for a 14th month running and at the fastest pace since February. Firmer demand and rising production needs also prompted manufacturers to step up purchasing for a second consecutive month, with growth there slightly quicker than in May.

Even so, stocks of inputs fell sharply and at their steepest rate in a year, despite the pickup in buying. Some firms said materials were being used directly to support production rather than held in reserve, whilst others pointed to continued difficulties importing goods. Suppliers’ delivery times lengthened again, though the deterioration was only modest and the mildest seen in four months.

Input cost inflation slowed markedly in June, easing to its softest rate since the start of the year, with firms citing material shortages and higher transport costs where prices did rise. Output price inflation eased in step, dropping to a six-month low.

Employment, however, continued to fall, marking a fourth straight month of job losses. The latest decline was modest but sharper than May’s, with several firms citing staff resignations. Despite the smaller workforce, backlogs of work also decreased, and at a solid pace.

Manufacturers remained upbeat about the year ahead, with confidence rising to a four-month high on hopes of further order growth, new product development and expansion plans — though sentiment stayed below levels seen before the outbreak of war in the Middle East.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said the Vietnamese manufacturing sector ended the first half of 2026 on a positive note, with sustained expansions of new orders and output recorded.

He added that anecdotal evidence from the survey suggested growth had been driven more by improving customer demand than by the safety-stock building that had supported May’s expansion, a shift that potentially reflected the marked easing in inflationary pressures during the month.

Less positive in June was a further reduction in employment despite upturns in output and new orders, suggesting that workloads still have some way to go before they return to levels putting pressure on capacity.

Overall, the sector goes into the second half of the year on a positive footing, and firms should be well placed to remain in growth territory should we see a more stable international environment during the remainder of 2026.