The Vietnamese manufacturing sector's growth momentum improved at the beginning of Q4/2025, output and new orders increased sharply and quickly, and employment increased for the first time in just over a year, according to S&P Global.
In a statement released on Monday, November 3, Andrew Harker, director of economics at S&P Global Market Intelligence, stated that the strength of the output expansions and new orders was enough to allow businesses to hire more employees and increase their input inventories.
"Whether these growth rates can be sustained in the months ahead remains to be seen, but there is clearly some positive momentum in the sector at present," he said.
Harker added, "Inflationary pressures built again, however, and are now relatively elevated. For now, customers are happy to look through price increases and commit to new orders, but this may start to wane should rates of inflation pick up further."
A 16-month high in business confidence coincided with a renewed increase in purchase stocks. In the meantime, S&P Global noted that inflationary pressures also increased, with input costs and output prices rising more quickly than in September.
The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) showed a strong monthly improvement in the sector's health, rising to 54.5 in October from a reading of 50.4 in September.
As a matter of fact, business conditions improved more than they have since July 2024. The headline PMI's five components all played a part in the index's October upward movement.
For the second consecutive month, there was a significant increase in new orders, and this time it was much faster than in September. Additionally, as consumer demand improved, the expansion rate was the fastest since July 2024.
Although it increased only marginally, new export orders helped the overall new business grow for the first time in a year.
In response to increased new orders, manufacturers increased production at the fastest rate since July 2024. Now, output has increased for each of the last six months.
In addition to observing a more robust increase in production during the most recent survey period, businesses also expressed greater optimism about the output outlook for the next 12 months.
With plans to increase production capacity and optimism that new orders will continue to rise, business sentiment improved to a 16-month high.
For the first time in just over a year, employment increased in October as a result of the rise in new orders and the corresponding expansion of output requirements.
In response to growing indications of strain on operating capacity, manufacturers also increased the size of their workforces.
In October, backlogs of work grew for the first time in ten months, and at the fastest rate in just over three and a half years.
Some businesses also connected backlog accumulation to stormy weather in addition to increased new orders. Longer delivery times from suppliers were also caused by unfavorable weather and related flooding.
Lead times increased steadily and most significantly since July. For the fourth consecutive month, businesses increased their purchasing activity as a result of higher new orders and increased production requirements.
The increase in purchases led to the first stockpile of purchases in just over two years. Meanwhile, as businesses used inventories to help meet order requirements, finished goods stocks fell.
However, because production ramped up during the month, inventories only slightly decreased—the least amount since January 2024. In October, the rate of input cost inflation increased significantly and reached its highest level since July 2024.
S&P Global noted that about 27% of respondents indicated that input prices were rising, citing shortages in supply and higher market prices for raw materials. Consequently, the output price inflation rate also increased and reached a 40-month high.
