HCMC – Vietnam’s manufacturing sector contracted sharply in April, with the Purchasing Managers’ Index (PMI) falling to its lowest level in 11 months, as new U.S. tariffs triggered a steep decline in orders, production, and business confidence, according to the latest data from S&P Global.
The S&P Global Vietnam Manufacturing PMI dropped from 50.5 in March to 45.6 in April, below the 50.0 no-change threshold. This marked the sharpest deterioration in manufacturing conditions since May 2023.
The report attributed the contraction largely to the U.S. tariff announcement and unstable global market conditions. New manufacturing orders declined at the fastest pace in nearly two years, reversing March’s growth. Export orders fell even more sharply, recording the most severe drop since June 2023.
As a result, production declined significantly in April, marking a reversal from the previous month’s increase. The pace of output contraction was the fastest since January 2023.
Amid growing concern about the long-term impact of the new U.S. trade policy, business sentiment dropped to its lowest level since August 2021. S&P Global said the level of optimism was among the weakest since the index began.
Manufacturers continued to scale back operations in response to falling demand. Employment declined for the seventh consecutive month, with the pace of job cuts reaching a three-and-a-half-year high. Purchasing activity also fell sharply, leading to the biggest drop in input buying since May 2023. Inventories of raw materials were likewise reduced.
Suppliers’ delivery times were largely stable, with only minor delays reported. While input prices edged up slightly due to increases in some raw material costs, others such as oil and transport were down. Overall input inflation slowed to its weakest rate since August 2023.
Selling prices dropped for the fourth month in a row. Although moderate, the pace of price reductions was the steepest in nearly two years as firms attempted to stimulate demand in a weakening market.
“The imposition of tariffs by the U.S. knocked the Vietnamese manufacturing sector into contraction during April, with firms seeing marked reductions in new orders, exports and production. What’s more, the potential for further disruption… meant that business confidence slumped and was one of the lowest on record,” said Andrew Harker, economics director at S&P Global Market Intelligence.
