HÀ NỘI — The announcement of tariffs by the US has caused a renewed contraction in the Vietnamese manufacturing sector in April, according to S&P Global.

The manufacturing Purchasing Managers' Index (PMI) dropped back below the 50.0 no-change mark, after signalling growth for the first time in four months this past March.

Việt Nam’s manufacturing PMI posted 45.6, a significant decrease of 4.9 points from the 50.5 figure in March.

Business conditions are the worst they have been since May 2023. New orders in the manufacturing sector dropped sharply in April, reversing March’s growth. The rate of decline was the fastest and most severe in nearly two years.

Surveyed businesses reported that the fall in new orders reflected the impact of US tariffs and ongoing volatility in global market conditions.

​​Tariffs and the drop in new orders led to a renewed decline in output after the brief increase in March. The fall was significant, marking the sharpest drop since January 2023. 

Manufacturers also expressed concern about the continued impact of tariffs on production in the months ahead. Business confidence dropped sharply to the lowest point since August 2021.

Economics Director at S&P Global Market Intelligence Andrew Harker said that the imposition of tariffs by the US knocked the Vietnamese manufacturing sector into a contraction in April, with firms seeing marked reductions in new orders, exports and production. 

“What's more, the potential for further disruption to the sector as a result of additional tariffs meant that business confidence slumped and was one of the lowest on record,” he added. 

Backlogs of work fell sharply amid the decrease in new orders, with the rate of depletion broadly in line with that seen in the previous month. Lower workloads led manufacturers to scale back employment for the seventh month in a row. 

Firms have also reduced their purchasing activity sharply in response to the reduction in new orders and declining output requirements. Input buying was down for the second consecutive month, marking the largest drop since May 2023. Stocks of purchases were also down, marking their largest decrease since last September.

A lack of demand meant that firms continued to lower their selling prices, while input costs rose only slightly. — BIZHUB/VNS