The solid overall improvement in business conditions was the 11th in as many months, S&P said in a release on Monday.

"A return to growth of new orders in May helped the Vietnamese manufacturing sector to expand midway through the second quarter of 2026," the company wrote.

But S&P noted that at least part of the increase was due to safety stock building at customers due to the war in the Middle East causing steep price rises and supply-chain delays. Similarly, stockpiling efforts also encouraged manufacturers to raise their own purchasing activity.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "On the face of it the latest S&P Global Vietnam Manufacturing PMI provides us with some positive news as new orders rebounded in May, leading to a similarly marked increase in manufacturing production.

"Digging a little deeper, however, sounds a note of caution, with at least some of the growth in May driven by stockpiling efforts amid the disruption caused by the war. There is some question therefore as to the sustainability of this upturn."

Meanwhile, Harker added, firms continue to face elevated price pressures, with input cost inflation accelerating again after hitting a 15-year high in April. "How events unfold elsewhere will again be central to determining the sector's performance over the months ahead."

Despite the improvements in new orders and output, firms continued to scale back their workforce numbers amid evidence of continued spare capacity.

A renewed increase in new export orders was also recorded, ending a two-month sequence of decline. Here though, the pace of expansion was only marginal, as high transportation costs and logistics issues limited international demand.

Renewed growth of new orders was matched by a marked expansion of manufacturing production in May. Output rose for the 13th successive month, and at the fastest pace since February.

Stockpiling efforts were also evident among manufacturers as purchasing activity increased for the first time in three months, and at a solid pace. The rate of input cost inflation continued to accelerate midway through the second quarter, quickening for the fourth consecutive month to the fastest since April 2011. Fuel, oil and transportation were the main drivers of higher input costs.

Vietnam posted 7.83% GDP growth in Q1/2026 from a year earlier, with the services sector accounting for 50.32% of the economy's total value added, according to the National Statistics Office.

The economy showed solid momentum in the period, supported by strong performances in industry, construction and services, which together accounted for the largest share of output.

The figure in Q1/2025 was 7.07%. The economy grew 8.02% in the whole 2025, while the parliament approved a GDP target of at least 10% for 2026.