Vietnam's manufacturing PMI rises in March amid modest recovery signs

Manufacturing production increased for the first time in three months during March, and to the largest degree since August last year amid renewed increases in both output and total new orders, as per S&P Global’s Vietnam Manufacturing PMI report.

With international demand weakening and firms exercising caution in hiring and purchasing due to softened business confidence, the rate of input cost inflation eased. At the same time, manufacturers reduced their selling prices for the third consecutive month.

A decline in global demand led firms to take a restrained stance on hiring and purchasing as business confidence deteriorated. Simultaneously, a slowdown in input cost inflation encouraged manufacturers to cut their selling prices for the third month in a row.

The rise in output in part reflected improvements in the availability of goods, but also a renewed increase in new orders, which likewise expanded following a two-month sequence of decline. Growth of new orders was recorded amid signs of improving customer demand but was only slight amid ongoing weakness in international demand. In fact, new export orders decreased markedly and at the fastest pace since July 2023.

New business from abroad has now fallen in five successive months. Some panellists reported a drop in orders from Mainland China. While output and total new orders returned to growth, firms were slightly less confident in the year-ahead outlook for production than was the case in February. Sentiment remained positive amid higher new orders and hopes for stable demand, but optimism was below the series average, the report added.

In March, manufacturers showed caution in both hiring and purchasing. Employment levels declined, partly due to firms being hesitant to hold excess inventory. For those that did procure inputs, supplier delivery times continued to lengthen, often due to delays in receiving goods from overseas. However, the latest decline in vendor performance was notably softer than in February and the weakest in seven months. Some panellists noted improved stock availability at suppliers and quicker transportation.

While higher costs for some imported items led input prices to increase again in March, muted demand for inputs led some suppliers to reduce their prices. Overall, input costs increased only slightly and at the slowest pace in the current 20-month sequence of inflation. Meanwhile, efforts to maintain competitiveness led manufacturers in Vietnam to lower their selling prices for the third consecutive month. The fall was only slight, however.

“The Vietnamese manufacturing sector kicked into gear in March, seeing the first increases in output and new orders in 2025 so far. Firms will hopefully be able to build on these improvements in the months ahead,” said Andrew Harker, economics director at S&P Global Market Intelligence. “For now, though, there is still a fair amount of caution among manufacturers, leading to a reluctance to hire additional staff or purchase extra inputs. This potentially reflects an uncertain international environment, with new export orders falling sharply during March.”

ALCHEMPro News Desk (SG)