Vietnam’s industrial production may increase by 6.7% in 2026 as manufacturers remain confident about winning new orders and expanding capacity, according to S&P Global.

In its latest report, the US-based firm said the Vietnamese manufacturing sector entered 2026 on a firm footing, with the Manufacturing Purchasing Managers’ Index (PMI) closing 2025 at 53.0.

Although the figure slipped slightly from 53.8 in November, it remained well above the 50.0 threshold, signaling continued improvement in overall business conditions.

S&P Global said operating conditions have strengthened for six consecutive months.

Manufacturers recorded another rise in output in December, extending the current expansion to eight months. Production growth stayed solid, though it softened to a three-month low.

Respondents attributed the increase partly to calmer weather in December, while stronger new orders continued to support output.

New business expanded for the fourth month in a row as customer demand improved. Growth slowed from November, however, as new export orders fell for the first time in three months.

Higher output requirements prompted firms to raise staffing levels. Employment increased for a third straight month, with job creation holding at a modest and steady pace.

Greater production capacity, together with improved weather, helped reduce backlogs of work for the first time in three months.

Despite calmer conditions at year-end, earlier storms and flooding continued to disrupt manufacturing activity, especially through damage to raw materials and delivery delays.

Suppliers’ delivery times lengthened sharply again, nearing the three-and-a-half-year record reported in November.

Input costs rose at the fastest pace since June 2022 due to material shortages and unfavorable exchange rate movements. Output prices increased at a similar pace to November and rose faster than the 2025 average.

Even so, manufacturers sharply increased purchasing activity amid stronger demand and output needs, with growth accelerating to a 16-month high.

Input inventories rose for a third consecutive month, while stocks of finished goods declined as firms shipped products quickly to customers.

Business confidence strengthened for the third straight month and reached its highest level since March 2024.

Nearly half of surveyed firms expect higher output in the year ahead, citing stronger demand, new product launches and expanded capacity.

Based on these trends, S&P Global expects Vietnam’s industrial output to rise 6.7% year on year in 2026.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said Vietnam’s manufacturing sector ended a turbulent year with renewed momentum.

Output and new orders increased again, while business confidence reached a 21-month high, he said.

Harker added that while calmer weather supported production in December, supply disruptions from earlier storms remained visible through longer delivery times and elevated cost pressures, which he expects to ease gradually as material flows improve.