The S&P Global Vietnam Manufacturing Purchasing Managers’ Index recorded a small jump in February over January, increasing from 48.9 points to 49.2, according to a press release from the firm. This is still below the 50-point no-change point signalling the sector is still in a contraction phase.
Of note, weak demand, both domestically and internationally, led to a solid drop in export orders for the fourth straight month. Production also fell for the second month in a row.
Employment levels continued to decline for the fifth month, though job cuts eased compared to January. Despite workforce reductions, spare capacity remained as outstanding business fell at the sharpest rate in 16 months.
Purchasing activity increased slightly, driven by improved business confidence—the highest since June 2024—and concerns over supply-chain disruptions. Supplier delivery times lengthened further, marking the worst delays in five months due to transport issues.
Input costs continued to rise due to higher freight and raw material prices, though at the slowest pace in 19 months. However, manufacturers reduced selling prices for the second consecutive month to counter weak demand, with the decline slightly steeper than in January.
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.
See also: Manufacturing in Vietnam: Ultimate Guide