MANUFACTURING SECTOR STARTS 2026 ON SOLID FOOTING

Workers process wood at a facility in Vietnam - PHOTO: DAT THANH

HCMC – The manufacturing sector continued to expand in January, supported by faster growth in output, new orders and employment, according to S&P Global.

The Vietnam Manufacturing Purchasing Managers’ Index (PMI) slipped slightly to 52.5 in January from 53.0 in December 2025. The reading remained well above the 50 mark that separates expansion from contraction, signaling a seventh consecutive month of improving business conditions.

Production growth accelerated at the start of the year as manufacturers responded to stronger demand. Survey respondents attributed higher output mainly to an increase in new orders, which rose at a faster pace than in December amid better customer demand.

Export orders returned to growth, marking the third increase in the past four months. Although the expansion was modest, firms reported receiving new business from several Asian markets, including India.

A line chart shows the S&P Global Vietnam Manufacturing Purchasing Managers’ Index from 2015 to January 2026, with the index remaining above the 50-point expansion threshold in January at 52.5, indicating continued improvement in manufacturing conditions – PHOTO: S&P Global

Employment rose for a fourth straight month, with the pace of job creation reaching its fastest level since June 2024. Some companies noted that part of the hiring was temporary, reflecting short-term production needs.

Purchasing activity also increased, extending a seven-month growth streak, as firms bought more inputs to support higher output. However, inventories of raw materials declined for the first time since September as stocks were used to meet production requirements. Finished goods inventories also fell, with companies reporting quicker shipment of products to customers.

Supply constraints continued to affect the sector. Suppliers’ delivery times lengthened again, though at the slowest pace in eight months. Firms cited strong demand for inputs and material shortages as the main causes.

Cost pressures remained elevated. Input prices rose sharply in January, only slightly below December’s three-and-a-half-year high. Manufacturers passed these costs on to customers, pushing selling prices up at the fastest rate since April 2022.

Despite inflation concerns, business confidence improved. Optimism about output over the next 12 months climbed for the fourth consecutive month to its highest level since March 2024. About 55% of surveyed firms expect production to increase over the coming year, driven by expectations of sustained order growth and improving market conditions.

Andrew Harker, economics director at S&P Global Market Intelligence, said the sector carried positive momentum into 2026 as firms expanded output to meet demand. He noted that inflationary pressures remain a potential risk, although demand has so far shown resilience.

Data for the survey were collected between January 12 and 22 from around 400 manufacturers across Vietnam.

Source: The Saigon Times