Vietnam Manufacturing Sees Strongest Expansion in Five Months Driven by New Orders and Exports

Vietnam's manufacturing sector experienced its strongest expansion in five months in July, driven by a significant increase in new orders, particularly from abroad. The latest Purchasing Managers' Index (PMI) data, compiled by S&P Global Market Intelligence, showed a marked improvement in business conditions. Business conditions have now strengthened for 13 consecutive months, with the rate of expansion in July being the most pronounced since February. Manufacturing production saw a sharp increase, rising at a five-month high. Output has consistently increased on a monthly basis since May 2025. Firms frequently linked higher output to an increase in new orders. New business expanded for the third month running in July, and at a faster pace than in June. Total new sales were notably supported by a solid rise in new export orders, which grew at their sharpest rate since July 2024. The improving growth picture in the sector was also partly attributed to a notable easing of inflationary pressures. This reduction in cost pressures likely allowed firms to secure new work more effectively. Andrew Harker, Economics Director at S&P Global Market Intelligence, stated, "The second half of 2026 got off to a strong start as July PMI data pointed to improving growth momentum across the Vietnamese manufacturing sector." He added, "Softening inflationary pressures and an improving demand environment meant that firms were increasingly able to secure new work, including from abroad where growth had remained muted up until July." Manufacturers expressed increased confidence in the future, leading to renewed hiring, as well as ramping up production and purchasing activities. However, business sentiment remains below pre-conflict levels, suggesting that geopolitical events could continue to influence the sector's fortunes. Despite this, hopes for continued order growth and plans for expanded production capacity are supporting a positive 12-month outlook for output.