The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) fell to 51.8 in June from 52.8 in May but remained above the 50-point threshold separating expansion from contraction, according to the latest release from S&P.
The survey found that manufacturers recorded a second consecutive month of higher new orders, supported by stronger customer demand.
Export orders also increased, although at a slower pace than total new business, while factory output rose for the 14th straight month at its fastest rate since February.
Manufacturers responded by increasing purchasing activity for a second month, but inventories of inputs declined at the fastest pace in a year.
Survey respondents said they drew down existing stocks to support production while continued difficulties importing materials contributed to supply shortages.
Supplier delivery times also lengthened, although delays were the least severe in four months.
Cost pressures moderated significantly during June.
Input price inflation eased to its weakest level since the start of the year, with firms attributing remaining increases to material shortages and higher transport costs.
Output price inflation also slowed, reaching a six-month low.
Despite higher production and new orders, manufacturers continued to reduce staffing levels for a fourth consecutive month.
S&P Global said some firms reported employee resignations, while falling backlogs of work suggested there was still spare capacity across the sector.
Businesses remained optimistic that production would increase over the coming year, with confidence improving to a four-month high.
Companies cited expectations of further growth in new orders, product development and business expansion, although sentiment remained below levels seen before the outbreak of conflict in the Middle East.