Vietnam manufacturing grows in August; confidence at 6-month high

Vietnam’s manufacturing sector has expanded again in August, though at a slower pace as demand faltered under the weight of US tariffs. The S&P Global Vietnam Manufacturing PMI stood at 50.4, down from 52.4 in July, signalling only a marginal improvement in business conditions despite a fourth consecutive month of production growth.

Production continued to rise, but new orders fell after briefly recovering in July. Export orders dropped for the tenth straight month, with the decline sharper than in total new business. Weak demand led firms to cut jobs for the eleventh month in a row, leaving spare capacity in the sector. Backlogs fell steeply, while finished goods stocks were reduced as manufacturers avoided holding excess inventories.

“While it was positive to see output expand again during August, a renewed fall in new orders calls into question how long firms will be able to keep increasing production. The drop in new sales was led by exports, which decreased solidly again as issues around tariffs continued to impact the sector,” Andrew Harker, economics director at S&P Global Market Intelligence, said in a release.

Despite subdued demand, purchasing activity increased for the second month running as firms-built input stocks in anticipation of better conditions. However, shortages of raw materials and reduced imports led to longer supplier delivery times. Input costs recorded their fastest rise of 2025 so far due to material scarcity, tariffs, and higher transport costs, though still below the long-run average.

Output charges rose modestly for the third straight month as firms passed on higher costs and taxes. Looking ahead, business confidence strengthened to a six-month high, supported by expectations of improved orders, though concerns over global economic uncertainty weighed on optimism.

"With the path ahead for tariffs seeming more stable now, the predicted improvements in demand will hopefully materialise in the months ahead, helping to maintain production growth in the sector," Harker said.

ALCHEMPro News Desk (HU)