Manufacturing growth remains solid in early 2026
Manufacturing growth remains solid in early 2026
Vietnam’s manufacturing sector maintained solid momentum at the start of 2026, supported by expanding output, rising employment and stronger purchasing activity.
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The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) posted 52.5 points in January, easing slightly from 53.0 points in December but remaining well above the 50.0 no-change threshold. The reading indicates a continued improvement in business conditions, marking the seventh consecutive month of strengthening health in the manufacturing sector.
The softening of growth signalled by the headline PMI was recorded despite a sharp and accelerated increase in manufacturing production in January. The marked rise in output was largely attributed by respondents to higher new orders, which also increased at a faster pace than in December amid improving customer demand.
Total new business was supported by a renewed expansion of new export orders. The rise was the third in the past four months, albeit slight overall. Panellists reported having received new orders from other Asian economies such as India.
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. Some firms indicated that workers had only been hired on a temporary basis, however.
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, however, 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 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.
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 per cent 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 added.
- 15:28 02/02/2026
