Vietnam's industrial sector closed 2025 on a high note, with production accelerating sharply in the final quarter as manufacturers stepped up output to meet year-end domestic consumption and export demand.
According to the National Statistics Office (NSO) under the Ministry of Finance, the Index of Industrial Production (IIP) rose 9.9% year-on-year in the fourth quarter of 2025, extending the sector's strong recovery momentum. For the full year, industrial output expanded 9.2%, surpassing the 8.2% growth recorded in 2024 and marking the fastest annual increase since 2019.
The performance reaffirmed industry's role as a key driver of economic expansion and reinforced Vietnam's standing as a regional manufacturing hub. Within the overall picture, the manufacturing and processing sector continued to anchor growth, posting a 10.5% increase in 2025, up from 9.5% the previous year.
The sector alone contributed 8.4 percentage points to total industrial growth, underscoring the effectiveness of the country's push toward modern, value-added manufacturing.
Other segments also registered gains. Electricity production and distribution climbed 6.7%, contributing 0.6 percentage points, while water supply and waste and wastewater management rose 7.8%, adding 0.1 percentage points. Notably, the mining sector, which had contracted by 6.3% in 2024, showed tentative signs of recovery with a 0.5% increase, contributing 0.1 percentage points to overall growth.
Industrial expansion was broad-based across the country. The NSO reported that IIP increased year-on-year in all 34 cities and provinces, though growth rates varied. Several localities posted robust gains driven by manufacturing and electricity output, while others recorded more modest increases amid weaker performances in selected subsectors.
Consumption remained a critical support for production. The consumption index for manufacturing and processing rose 9.9% in 2025. Although lower than the 11.4% increase in 2024, the figure still reflected solid demand and helped maintain cash flow for businesses. Inventory pressures, however, persisted, with average inventory levels rising to 81.1% for the year, compared to 77.1% in 2024, pointing to the need for more agile supply chain management.
Employment trends were broadly positive. As of December 1, the number of workers in industrial enterprises rose 0.8% from a month earlier and 2.4% year-on-year.
State-owned enterprises (SOEs) saw employment increase 0.2% month-on-month but decline 0.6% year-on-year. Non-State enterprises recorded gains of 0.8% month-on-month and 0.3% year-on-year, while foreign-invested enterprises (FIEs) posted stronger increases of 1% month-on-month and 3.3% year-on-year.
By sector, employment in mining was unchanged from November but rose 1.1% year-on-year. Manufacturing and processing employment grew 0.9% month-on-month and 2.4% year-on-year. Jobs in electricity, gas, steam, hot water and air conditioning supply increased 0.1% month-on-month and 2.9% year-on-year, while water supply and waste management employment rose 0.4% and 0.7%, respectively.
Foreign direct investment (FDI) continued to underpin industrial growth. As of December 31, manufacturing and processing attracted $9.8 billion in newly licensed FDI, accounting for 56.5% of total newly registered capital. Including both new and additional capital, total FDI into the sector reached $18.59 billion, representing 59.2% of overall newly registered and additional capital.
Business sentiment improved alongside these inflows. An NSO survey conducted in the fourth quarter found that 75.8% of enterprises reported business conditions had improved or remained stable compared to the third quarter, with 25.4% noting improvement and 50.4% stability. Optimism was particularly strong in manufacturing and processing, where 79.1% of firms assessed conditions as improved or stable.
Confidence levels were highest among SOEs and FIEs. Among SOEs, 78.7% reported improved or stable conditions, while the figure stood at 77.2% for FIEs and 75.3% for non-State enterprises. The overall balance index, which measures the difference between positive and negative responses, stood at 1.2%, while manufacturing and processing posted a notably stronger 14.3%.
In contrast, construction and trade and services continued to face headwinds, with balance indices of 0.8% and minus 2.5%, respectively, highlighting industry's central role in sustaining broader economic confidence.
Further evidence of industrial resilience came from the December Purchasing Managers' Index (PMI) for manufacturing and processing, released by S&P Global in early January. The PMI stood at 53.0 in December, marking the sixth consecutive month of expansion and the eighth straight month of output growth.
While new order growth eased slightly toward the end of the year amid a mild decline in export orders, domestic demand remained strong enough to keep factories operating at high capacity. However, lingering disruptions from natural disasters and flooding earlier in the year, coupled with raw material shortages and delivery delays, pushed input costs up at the fastest pace since June 2022.
Despite these pressures, manufacturers ramped up purchasing activity at the fastest rate in 16 months in anticipation of stronger production in 2026. Business confidence at year's end reached its highest level since March 2024, with nearly half of surveyed firms expecting robust output growth next year, supported by a recovery in global demand, diversified product offerings and capacity upgrades.
Looking ahead, economists at S&P Global Market Intelligence forecast industrial output growth of 6.7% in 2026. With supply chain bottlenecks expected to ease and major FDI projects moving into stable operations, the projection is seen as achievable.
After a year of solid expansion and strengthening investor confidence, Vietnam's industrial sector enters 2026 with renewed momentum and a strengthened foundation for sustained growth.
