After recording marginal improvements in the opening two months of the year, business conditions in the Vietnamese manufacturing sector were broadly unchanged in March, according to a release on April 1 by S&P Global Vietnam. 

The S&P Global Vietnam Manufacturing Purchasing Managers' Index™ (PMI) dipped below the 50.0 ‘no change’ mark in March, posting 49.9 after a reading of 50.4 in February. 

The index therefore signalled an end to the two-month period of improving business conditions at the start of 2024 but pointed to broadly unchanged operating conditions overall. 

The latest result followed growth in the prior two months, amid subdued demand that led to falls in output and new orders. 

New export orders shrank the most since last July due to competitive pressures and geopolitical issues. Firms cut their purchasing activity for the fifth month, resulting in a solid drop in stocks of inputs. 

Concurrently, employment rose at the fastest pace since October 2022. Outstanding business depleted for the second month, with the rate of drop the steepest in five months. 

Delivery times were broadly unchanged as overseas shipping delays were mitigated by vendors having sufficient inventory holdings to meet orders.

On the cost front, input prices rose the least since last August and were weaker than average. Meantime, selling prices fell for the second time in the past three months. Looking ahead, sentiment hit an 18-month high. 

Andrew Harker, Economics Director at S&P Global Market Intelligence, said: “Growth stalled in the Vietnamese manufacturing sector in March as subdued demand put the brakes on new orders and production. Demand weakness was also reflected in the PMI survey's price indices as input cost inflation slowed and an outright reduction in selling prices was recorded. 

"On a more positive note, firms are increasingly optimistic that the sector will move back into gear in the months ahead, and this confidence helped to drive accelerated job creation at the end of the first quarter."  

Manufacturing PMI in Việt Nam is expected to be 51.20 points by the end of this quarter, according to Trading Economics global macro models and analysts’ expectations. 

In the long-term, the Vietnam Manufacturing PMI is projected to trend around 52.00 points in 2025, according to S&P Global econometric models. — VNS