According to the report, output growth strengthened in the Vietnamese manufacturing sector at the start of 2026. A faster expansion in production coincided with sustained new order growth and firms becoming increasingly optimistic regarding the year-ahead outlook for output. Rising production requirements led to further increases in employment and purchasing.

The marked increase in manufacturing production seen in January was supported by sustained job creation. Employment rose for the fourth successive month. Although the pace of job creation was modest, it quickened to the fastest since June 2024.

However, some firms indicated that workers had only been hired on a temporary basis. Firms also raised their purchasing activity in response to greater output requirements, extending the current sequence of growth to seven months.

Stocks of inputs decreased for the first time since last September, as purchased items were used to support production growth. Stocks of finished goods were also down, and at a solid pace that was the fastest in four months. Respondents noted that products were shipped promptly to customers. The delivery of goods to clients and the ramping up of production meant that manufacturers were able to keep on top of workloads in January. Backlogs of work decreased for the second month running, albeit marginally.

Suppliers' delivery times continued to lengthen, albeit to the least marked extent in eight months. Panellists linked delivery delays to higher demand for inputs and material scarcity. These factors also resulted in higher input costs, which rose sharply again at the start of 2026. The pace of inflation was only slightly softer than the three-and-a-half-year high seen in December.

In turn, firms continued to increase their selling prices rapidly. Moreover, the rate of charge inflation quickened to the fastest since April 2022. Optimism in the 12-month outlook for production continued to strengthen at the start of 2026, improving for the fourth consecutive month to the highest since March 2024. Exactly 55% of respondents predicted a rise in output over the coming year, with firms expecting continued new order growth amid improving market conditions.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said it was a solid start to the year for the Vietnamese manufacturing sector as firms ramped up output in response to greater new orders and as part of efforts to meet client needs in a timely manner. Carrying on the momentum built towards the end of 2025, the sector looks to be in good shape for a successful 2026.

“The one potential headwind for firms, however, is the strength of inflationary pressures. Supply shortages of materials pushed up prices sharply again in January and firms responded accordingly by hiking their selling prices to a greater extent. So far demand has remained resilient in the face of these pressures, but we will need to keep an eye out for any softening of new order growth in the months ahead,” he noted.

Vietnam’s PMI rebounds in July, signaling manufacturing recovery

VOV.VN - Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) rose to 52.4 in July, signaling an improvement in overall manufacturing sector health, according to the S&P Global's latest report released on August 1.