Vietnam manufacturing output rises for first time in four months
THE HANOI TIMES — Vietnam's manufacturing sector showed signs of recovery in March, with the S&P Global Manufacturing Purchasing Managers' Index (PMI) rising above the 50.0 threshold for the first time in four months, signaling an improvement in business conditions.
The PMI rose to 50.5 in March from 49.2 in February, indicating a modest strengthening in the health of the sector.
"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 Andrew Harker, Economics Director at S&P Global Market Intelligence.
Production increased for the first time in three months and at the fastest rate since August 2024, driven by improved availability of goods and a renewed rise in new orders. However, growth in total new business was slight, weighed down by continued weakness in international demand. New export orders fell sharply, marking the steepest decline since July 2023 and extending a five-month streak of contraction. Some firms reported a drop in orders from mainland China.
Despite the pickup in production, manufacturers remained cautious, cutting back on hiring and reducing purchases of inputs. Staffing levels fell for the sixth consecutive month, although the rate of decline was the slowest so far this year. Purchasing activity also fell for the first time in four months, with firms indicating that existing stocks were sufficient to meet production needs. Stocks of both purchases and finished goods fell, reflecting subdued demand and a reluctance to hold excess inventories.
Electronics manufacturing at MBT Electrical Equipment Company. Photo: Hoai Nam/The Hanoi Times
Supply chain pressures eased slightly, with supplier performance deteriorating at a slower pace than in February. Some firms reported better stock availability from suppliers and faster transport times. Input costs rose slightly, reflecting higher prices for some imported materials. However, subdued demand prompted some suppliers to cut prices, resulting in the slowest rise in input costs for 20 months.
To remain competitive, Vietnamese manufacturers cut selling prices for the third consecutive month, although the decline was modest. "There is still a fair amount of caution among manufacturers, leading to a reluctance to hire additional staff or purchase extra inputs," Harker noted.
While overall sentiment remained positive due to higher new orders and expectations of stable demand, confidence levels declined slightly from February and remained below historical averages.
