Vietnam’s manufacturing sector shrank in April as newly announced US tariffs triggered a sharp drop in orders, production, and sentiment, according to a press release from S&P Global Vietnam Manufacturing Purchasing Managers’ Index. Vietnam’s PMI fell to 45.6, down from 50.5 in March, signalling the steepest monthly contraction since May 2023.

Other key points in the release include:

Output declined at the fastest pace since January 2023
New orders and export orders both fell sharply
Business confidence hit a 44-month low amid tariff uncertainty
Employment dropped for the seventh month in a row, with job cuts at a 3.5-year high
Purchasing activity and input stocks decreased significantly
Selling prices fell for the fourth consecutive month

The downturn highlights the immediate impact of US tariffs on Vietnam’s manufacturing sector. With weakening demand, falling exports, and reduced hiring, the sector faces mounting pressure in the months ahead. This should concerns about industrial stability and broader economic momentum.

The S&P Global Vietnam Purchasing Managers’ Index is a key economic indicator that reflects the performance and health of Vietnam’s manufacturing sector. The PMI is derived from monthly surveys of private sector companies, covering various aspects of the manufacturing process, such as new orders, production, employment, supplier delivery times, and inventory levels.

The PMI is an index number ranging from 0 to 100. A PMI above 50 indicates expansion in the manufacturing sector compared to the previous month, while a reading below 50 suggests contraction. A reading of 50 indicates no change. The PMI is based on responses from purchasing managers in a panel of around 400 manufacturing companies in Vietnam. These managers are asked about various aspects of their operations compared to the previous month.