The S&P Global Viet Nam Manufacturing Purchasing Managers' Index (PMI) climbed to 52.8 in May from 50.5 in April, marking its highest level since February and signaling a stronger improvement in business conditions. The latest reading indicates a solid rebound in demand despite ongoing global uncertainties.

The report noted that selling price inflation remained elevated in May, although it eased slightly from April's level. Price pressures were still among the strongest recorded over the past 15 years.

Manufacturers continued to face rising costs linked to fuel, transportation, and shipping, while logistics challenges contributed to further delays in suppliers' delivery times. However, the deterioration in vendor performance was less severe than in the previous month.

Extended lead times led to a continued decline in stocks of purchases, even as firms increased their purchasing activity. Pre-production inventories fell at the fastest pace in nearly a year, while finished goods inventories also decreased, though at a slower rate than in April.

Although new orders recovered, firms were generally able to meet demand with existing capacity and process outstanding workloads. Consequently, backlogs of work declined for the second consecutive month.

Signs of spare capacity also contributed to another reduction in manufacturing employment. Staffing levels fell for the third straight month, though the pace of job cuts remained only marginal.

Business confidence improved to a three-month high in May, supported by expectations of stronger order inflows and planned business expansion. Nevertheless, overall sentiment remained relatively subdued as manufacturers continued to monitor the potential impact of the ongoing conflict in the Middle East./.