The S&P Global Vietnam Manufacturing Purchasing Managers’ Index (PMI) rose to 54.5 in October, up from 50.4 in September, signalling a solid monthly improvement in business conditions. This marks the strongest expansion in the sector since July 2024, reflecting renewed growth in production and new orders at the start of the final quarter of 2025.

All five of the constituent parts of the headline PMI contributed to the upwards movement in the index in October. Specifically, new orders increased for the second consecutive month, and at a sharp pace that was much stronger than seen in September. Moreover, the rate of expansion was the fastest since July 2024 as customer demand improved.

New export orders contributed to growth of overall new business, rising for the first time in a year, albeit only slightly. Manufacturers responded to higher new orders by ramping up production, which increased at the sharpest pace since July 2024. Output has now risen in each of the past six months.

Manufacturing firms were more optimistic regarding the 12-month outlook for output. Business sentiment strengthened to a 16-month-high amid confidence that new orders will continue to rise and alongside plans to expand production capacity.

The increase in new orders and associated expansion of output requirements also resulted in a rise in employment in October, the first in just over a year. Manufacturers also expanded their workforce numbers in response to emerging signs of pressure on operating capacity. Backlogs of work increased for the first time in 10 months during October, and at a solid pace that was the fastest in just over three-and-a-half years. As well as higher new orders, some firms also linked backlog accumulation to stormy weather conditions.

Adverse weather and associated flooding also contributed to longer suppliers' delivery times. Lead times lengthened solidly, and to the greatest extent since July.

Higher new orders and greater production requirements encouraged firms to expand their purchasing activity, the fourth month running in which this has been the case. The rise in purchasing fed through to an accumulation of stocks of purchases, the first in just over two years.

The rate of input cost inflation accelerated sharply in October and was the strongest since July 2024. Around 27 per cent of respondents signalled a rise in input prices, reporting higher market rates for raw materials and supply shortages. In turn, the rate of output price inflation also quickened and hit a 40-month-high.

Andrew Harker, economics director at S&P Global Market Intelligence, said, "The Vietnamese manufacturing sector moved up a gear in October, seeing much stronger increases in output and new orders during the month. Positively, the strength of the expansions were sufficient to enable firms to take on extra staff and build inventories of inputs."

"Whether these growth rates can be sustained in the months ahead remains to be seen, but there is clearly some positive momentum in the sector at present. Inflationary pressures built again, however, and are now relatively elevated. For now, customers are happy to look through price increases and commit to new orders, but this may start to wane should rates of inflation pick up further," he added.