The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) ended the year at 53.0 points, down slightly from 53.8 in November but still comfortably above the 50.0 expansion threshold, signalling continued improvement in sector conditions. Business activity has now expanded for six consecutive months.

Vietnamese manufacturers recorded another rise in production in December, extending the current expansion to eight months, though the pace eased to its softest in three months. Respondents cited more stable weather conditions alongside continued growth in new orders as key factors supporting output.

New business increased for a fourth consecutive month amid improving customer demand, although growth slowed from November. Overall order expansion was constrained by a renewed decline in export demand, with new export orders falling for the first time in three months.

Higher output requirements encouraged firms to expand staffing levels, lifting employment for a third consecutive month at a modest and largely unchanged pace. Increased production capacity from higher employment, together with calmer weather, helped ease pressure on operations, leading to a renewed fall in backlogs of work – the first decline in three months.

Input costs increased at the fastest pace since June 2022 amid material scarcity and unfavourable exchange rate movements. In turn, output prices increased solidly, with the pace of inflation little-changed from November. The latest rise was much faster than the average for 2025 as a whole.

Although input costs increased rapidly, manufacturers still raised their purchasing activity sharply amid higher new orders and greater output requirements. Moreover, the pace of growth quickened to a 16-month-high. Stocks of inputs also rose, the third month running in which this has been the case.

Turning to prospects for 2026, manufacturers were increasingly optimistic that output will rise over the coming year. Confidence strengthened for the third month running and was the highest since March 2024. Close to half of respondents predicted a rise in output over the coming year, linked to improving customer demand, the launch of new products, and increased production capacity.

Overall, the sector goes into 2026 in a positive position, with manufacturers optimistic of securing new business and being able to expand their production capacity. S&P Global Market Intelligence forecasts industrial production growth of 6.7 per cent in 2026.