VIETNAM MANUFACTURING PMI STAYS ABOVE 50, LIFTING OUTLOOK FOR 2026

An employee works at a feed mill - PHOTO: DAT THANH

HCMC – Vietnam’s manufacturing sector ended 2025 on a positive note, with business conditions improving for a sixth consecutive month, reinforcing growth expectations for 2026, according to the latest Purchasing Managers’ Index (PMI) released by S&P Global on January 2.

The PMI for December stood at 53.0, down slightly from 53.8 in November but remaining firmly above the 50-point threshold that separates expansion from contraction. The reading signals sustained growth momentum in the manufacturing sector.

However, the report also highlighted mounting cost pressures. Input prices rose at their fastest pace since June 2022, driven mainly by shortages of raw materials and unfavorable exchange rate movements.

Commenting on the overall trend, Andrew Harker, economics director at S&P Global Market Intelligence, said Vietnam’s manufacturing sector closed a volatile year with encouraging signals. Output and new orders continued to rise, while business confidence reached a 21-month high. Based on these developments, S&P Global forecasts Vietnam’s industrial output to grow by 6.7% in 2026.

Survey data for December showed manufacturing output expanding for the eighth consecutive month, though at a slower pace than in November. Growth was supported by improved weather conditions and a fourth straight month of rising new orders, reflecting stronger domestic demand. In contrast, new export orders declined after three months of growth, partly limiting the overall expansion.

Higher production needs led to a third consecutive monthly increase in employment, although job growth remained modest. Workforce expansion, combined with smoother operating conditions, helped reduce backlogs after two months of accumulation.

Supply chain disruptions persisted, reflecting the lingering effects of storms and flooding earlier in the year. Damage to raw materials during transportation and supplier delays continued to lengthen delivery times, although delays eased slightly from the record levels seen in November.

Cost pressures intensified further in December. Input costs surged at the sharpest rate since mid-2022, while output prices also rose significantly, well above the 2025 average. Despite this, manufacturers increased purchasing activity at the fastest pace in 16 months to meet orders and production plans. Input inventories continued to rise, while stocks of finished goods fell sharply as products were delivered more quickly to customers.

Despite higher costs and ongoing risks, sentiment remained positive. Business confidence improved for the third straight month, reaching its highest level since March 2024. Nearly half of surveyed firms expect output to increase in 2026, supported by stronger demand, new product launches and capacity expansion plans.

Source: The Saigon Times