HCMC – Vietnam’s manufacturing sector rebounded in March after three months of contraction, according to the latest S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI).
The PMI climbed above the 50.0 threshold for the first time in four months, reaching 50.5 in March from 49.2 in February. This improvement signals a modest uptick in overall manufacturing conditions at the close of the first quarter of this year.
Factories recorded a renewed rise in output, the sharpest since August last year, partly driven by better availability of goods and an increase in new orders. While domestic demand appeared to pick up, global orders continued to show weakness. New export shipments fell steeply for the fifth consecutive month and at the fastest pace since July 2023, with some respondents noting diminished orders from China.
Despite the improvement in production and new orders, manufacturers remained cautious. Employment levels declined for the sixth straight month, albeit at the slowest rate so far this year, as firms pointed to subdued demand and voluntary staff departures. Purchasing activity also dipped for the first time in four months, with some companies reporting sufficient stocks to meet current requirements.
In terms of prices, modest input cost inflation persisted, largely linked to higher expenses on imported items. However, tepid demand prompted some suppliers to cut prices, leading overall input costs to rise only slightly. Efforts to stay competitive saw Vietnamese manufacturers reduce their selling prices for the third straight month, though the decline was minimal.
Commenting on these developments, Andrew Harker, economics director at S&P Global Market Intelligence, noted that March marked the first time in 2025 that output and new orders recorded positive growth.
“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 Harker.
He added that while this improvement may lay the groundwork for further recovery, manufacturers remain wary of expanding their workforce or purchasing more materials, partly due to the uncertain global environment and weakening export performance.
Looking ahead, firms stayed optimistic about production for the coming year, citing higher new orders and hopes of stable demand. However, overall business confidence moderated compared to February, reflecting lingering caution in a still-fragile international marketplace.
