As a result, firms scaled back employment again.
On the price front, the pace of input cost inflation eased to a 19-month low and charges were reduced for the second month running.
The S&P Global Vietnam manufacturing PMI was below the 50 no-change mark for the third consecutive month in February, despite rising slightly to 49.2 from 48.9 in January.
The latest reading reflected a slight deterioration in business conditions over the course of the month.
After having fallen for the first time in four months during January, new orders decreased again in February. The rate of contraction was modest, but quickened to the fastest since last September, a release from S&P Global Ratings said.
Panellists reported demand weakness both inside the country and across the globe. Muted export demand was highlighted by a further solid decline in new business from abroad, the fourth reduction in as many months.
In line with the picture for new orders, manufacturing production also decreased for the second successive month in February.
Shortages of new work also led some firms to hold off on replacing departing staff, thereby resulting in a fifth consecutive fall in employment. The rate of job cuts eased from January, however.
Despite the reduction in workforce numbers, there remained evidence of spare capacity in the sector amid falling new orders.
Outstanding business decreased markedly, and to the largest extent in 16 months. Bucking the wider trends across the sector during February, purchasing activity increased slightly.
In some cases, rising input buying reflected confidence in the upcoming path of manufacturing output.
Business confidence strengthened for the second month in a row to the highest since June last year. Firms hope for stable economic conditions to support an improvement in new orders, and thus, production growth.
Another factor behind the rise in purchasing activity seen in February was a desire to make sure materials were secured amid uncertainty around availability and supply-chain delays. Suppliers' delivery times lengthened again, continuing the sequence of deteriorating vendor performance which began in September 2024.
Moreover, the latest lengthening of lead times was marked and the most pronounced in five months. Panellists reported issues with both the availability and speed of transportation.
Delivery delays, plus the use of inputs to support production, meant that stocks of purchases continued to fall despite an increase in buying.
Stocks of finished goods were also down amid falling production and efforts to draw down inventories amid lower new orders. Freight costs increased as well. Alongside higher raw material prices, this meant that input costs rose again in February.
ALCHEMPro News Desk (DS)
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