According to a study by S&P Global released on July 1, business confidence has bounced back from the 44-month low seen in April. Hopes for more stable market conditions and a reduction in trade tensions were among the factors supporting the optimistic outlook, which was nonetheless weaker than the series average.

Andrew Harker, economics director at S&P Global Market Intelligence, said, "June saw a worsening of international demand conditions for Vietnamese manufacturers as the impact of tariffs intensified. A steep drop in exports contributed to a further reduction in total new orders and led firms to scale back employment and purchasing."

The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) dropped to 48.9 points in June from 49.8 points in May, posting below the 50.0 no-change mark for the third month running and signalling a modest deterioration in business conditions as the first half of the year drew to a close.

Central to the latest worsening in the overall health of the manufacturing sector was a third successive fall in new orders. New business decreased modestly in June, but at a faster pace than in May.

Demand worsened particularly sharply in export markets, with new business from abroad declining to a much larger degree than total new orders. The fall in new export business was the joint-fastest since September 2021, equal with that seen in May 2023. A number of respondents indicated that US tariffs had been behind the fall in new export orders.

The fall in total new orders fed through to reductions in employment, purchasing, and inventory holdings in June. Staffing levels decreased for the ninth month running and at a marked pace that was much faster than that seen in May. Firms were still able to deplete backlogs of work, and at a solid rate.

Despite ongoing demand weakness, manufacturers continued to increase their production volumes in June. Output rose for the second month running, albeit only slightly and at a slower pace than in May.

Harker further noted that, "One positive from the latest PMI survey was that firms continued to expand their output, but this is unlikely to continue for long without an improvement in the demand situation. The first half of 2025 has been characterised by volatility and uncertainty, particularly around trade conditions. Business confidence has recovered somewhat in recent months, but positive sentiment is largely based on hopes for a more stable picture going forward. Whether that will indeed be the case remains to be seen."