Manufacturing production rises at fastest pace in just over two years

Vietnam's manufacturing sector experienced its fastest growth in production since mid-2023, according to the latest figures from S&P Global. The S&P Global Vietnam Manufacturing Purchasing Managers Index (PMI) rose to 53.3 in August, marking the strongest pace of expansion in over two years. This upward trend comes despite factors such as emerging geopolitical instability and softer price pressures.

New orders and manufacturing production both saw significant increases, with new orders growing at a faster rate than ever since October last year. Despite this bullish outlook, employment levels have been declining, marking the fifth consecutive month of staffing reductions.

The slowdown in new export orders, the first in four months, was offset by a rise in new business at home. At the same time, manufacturers scaled back temporary labor use as work backlogs increased for a second consecutive month.

Output growth has been backed by higher purchasing activity, although stocks of purchases remain low. However, the reduction in preproduction inventories was the smallest in five months. Finished goods stocks also fell as products were shipped to customers, marking the fastest decline since April.

While cost inflation has eased to an 11-month low, manufacturers are facing the impact of higher oil prices, which are increasing the costs of derived products like fuel, plastics, and shipping. Overall, despite ongoing uncertainty, manufacturers remain optimistic about future output growth.