"A faster expansion in production coincided with sustained new order growth and firms becoming increasingly optimistic regarding the year-ahead outlook for output," the agency wrote in a release on Monday

Rising production requirements led to further increases in employment and purchasing. Inflationary pressures remained relatively elevated, however, with manufacturing selling prices increasing at the fastest pace since April 2022.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "It was a solid start to the year for the Vietnamese manufacturing sector as firms ramped up output in response to greater new orders and as part of efforts to meet client needs in a timely manner. Carrying on the momentum built towards the end of 2025, the sector looks to be in good shape for a successful 2026."

"The one potential headwind for firms, however, is the strength of inflationary pressures. Supply shortages of materials pushed up prices sharply again in January and firms responded accordingly by hiking their sellingprices to a greater extent. So far demand has remained resilient in the face of these pressures, but we will need to keep an eye out for any softening of new order growth in the months ahead," he added.

The S&P Global Vietnam Manufacturing Purchasing Managers'Index posted 52.5 in January, down slightly from 53.0 in December but still comfortably above the 50.0 no-change mark and thus pointing to a solid monthly improvement in business conditions at the start of 2026.

The health of the sector has now strengthened in seven successive months. The softening of growth signalled by the headline PMI was recorded in spite of a sharp and accelerated increase in manufacturing production during January.

The marked rise in output was largely attributed by respondents to higher new orders, which also increased at a faster pace than in December amid improving customer demand, S&P noted.

Total new business was supported by a renewed expansion of new export orders. The rise was the third in the past four months, albeit slight overall. Panellists reported having received new orders from other Asian economies such as India.

The marked increase in manufacturing production seen in January was supported by sustained job creation. Employment rose for the fourth successive month.

Although the pace of job creation was modest, it quickened to the fastest since June 2024. Some firms indicated that workers had only been hired on a temporary basis, however.

Firms also raised their purchasing activity in response to greater output requirements, extending the current sequence of growth to seven months.

Stocks of inputs decreased for the first time since last September, however, as purchased items were used to support production growth. Stocks of finished goods were also down, and at a solid pace that was the fastest in four months. Respondents noted that products were shipped promptly to customers.

The delivery of goods to clients and ramping up of production meant that manufacturers were able to keep on top of workloads in January. Backlogs of work decreased for the second month running, albeit marginally.

Suppliers' delivery times continued to lengthen, albeit to the least marked extent in eight months. Panellists linked delivery delays to higher demand for inputs and material scarcity.

These factors also resulted in higher input costs, which rose sharply again at the start of 2026. The pace of inflation was only slightly softer than the three-and-a-half year high seen in December.

In turn, firms continued to increase their selling prices rapidly. Moreover, the rate of charge inflation quickened to the fastest since April 2022.

Optimism in the 12-month outlook for production continued to strengthen at the start of 2026, improving for the fourth consecutive month to the highest since March 2024.

Exactly 55% of respondents predicted a rise in output over the coming year, with firms expecting continued new order growth amid improving market conditions.

Vietnam's GDP growth of 8.02% in 2025 stood out as a bright spot amid continued global volatility, including trade tensions and U.S. reciprocal tariff policies, and world's economic slowdown.

The National Assembly, Vietnam's legislature, on November 12 approved a resolution setting an economic expansion target of at least 10% for 2026, per capita GDP at $5,400-5,500, and inflation controlled at around 4.5%.

Japanese companies operating in Vietnam are the most willing in Southeast Asia to expand their business in the next one to two years, driven mainly by domestic market demand and services catering to fellow Japanese firms, a survey by Japan External Trade Organization (Jetro) showed.

Some 56.9% of Japanese companies in Vietnam plan to expand their operations in the next one to two years, up 0.8 percentage points from a year earlier, according to Jetro’s 2025 survey on the business conditions of Japanese companies investing overseas.

Although expansion intentions are broadly stable year-on-year, Vietnam ranks first in ASEAN for the second consecutive year, with the expansion rate exceeding the ASEAN average of 46.8% and the Asia-Oceania average of 45%, Jetro said.