Manufacturing sector ends the first half of 2026 on a positive note

Manufacturing sector ends the first half of 2026 on a positive note

Vietnam's manufacturing sector remained in growth territory in June, supported by rising demand in new orders and easing inflationary pressures.

Photo: Duc Thanh

The S&P Global Vietnam Manufacturing Purchasing Managers' Index posted 51.8 points in June, down from 52.8 in May but still above the 50.0 no-change mark, indicating continued improvement in the sector. Business conditions have strengthened on a monthly basis throughout the past year.

After returning to growth in May, new orders increased again in June as panellists reported improvements in customer demand. The latest expansion was solid, albeit softer than in the previous survey period. New export orders also rose, albeit only slightly and to a smaller extent than total new business.

The latest rise in new orders helped to support sustained growth of manufacturing production. Output rose for the fourteenth successive month, and at a marked pace that was the fastest since February

Higher new orders and rising output requirements encouraged manufacturers to expand their purchasing activity for the second month running in June. As was the case with output, the rate of growth was slightly quicker than that seen in May.

Despite another marked rise in purchasing, stocks of inputs decreased at a sharp and accelerated pace in June. In fact, the fall was the most marked for a year. In some cases, inputs had been used to support production growth rather than being held in stock, while challenges in importing goods were also mentioned.

Indeed, sourcing inputs in general again proved difficult for firms as suppliers' delivery times lengthened further. The latest deterioration in vendor performance was only modest and the least marked in four months, however.

Input costs continued to rise sharply in June, but the rate of inflation was much softer than that seen in May and the lowest since the start of the year. Where input prices increased, panellists linked this to material supply shortages and higher transportation costs. Similarly, the rate of output price inflation also eased in June and was at a six-month low.

Contrasting with the generally positive picture in June, employment continued to decrease, the fourth month running in which this has been the case. Although modest, the latest fall was sharper than that seen in May as a number of firms reported employee resignations. Despite lower workforce numbers, outstanding business decreased again, and at a solid pace.

Manufacturers remained optimistic that output will rise over the coming year, and confidence ticked up to the highest in four months. Hopes for further increases in new orders, new product development and efforts to expand operations were among the factors supporting optimism. That said, sentiment remained below the level seen before the outbreak of war in the Middle East.

VIR