Manufacturing production increased sharply in July, with the rate of expansion quickening to a five-month high. Output has now risen continuously on a monthly basis since May 2025.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index rose to 52.9 in July, up from 51.8 in June and signalling a solid monthly improvement in the health of the sector.

Sharper increases in output, new orders, exports and purchasing were recorded, while employment rose for the first time in five months.

Firms were helped by a further easing of inflationary pressures, with input costs and output prices each rising at the slowest rates in 10 months. Supply-chain delays were also less pronounced, S&P Global stated in a release on August 3.

Andrew Harker, economics director at S&P Global Market Intelligence, wrote: "The second half of 2026 got off to a strong start as July PMI data pointed to improving growth momentum across the Vietnamese manufacturing sector."

Harker noted that softening inflationary pressures and an improving demand environment meant that firms were increasingly able to secure new work, including from abroad where growth had remained muted up until July.

"Manufacturers were confident enough in the future to begin hiring staff again, as well as ramping up productionand purchasing. Business sentiment remained below the level seen prior to the outbreak of war in the Middle East, however, and the fortunes of the sector for the remainder of the year will likely remain closely tied to geopolitical events."

According to respondents, the rise in input buying mainly reflected higher output requirements, although some firms purchased items for use in the future. With inputs being utilized to support sharply rising production, stocks of inputs continued to fall markedly. Stocks of finished goods were also down as products were shipped to customersto help satisfy order requirements.

Manufacturers also responded to greater workloads by taking on extra staff, the first time this had been the case in five months. That said, the pace of job creation was insufficient to prevent a build-up of backlogs of work amid solid new order growth.

Hopes that new orders will continue to rise and plans for expanded production capacity were among the factors supporting confidence in the 12-month outlook for output in July.

Standard Chartered last month raised its 2026 GDP growth forecast for Vietnam to 9.5%, bringing it closer to the government's target of "at least 10%" and reflecting strong economic momentum and supportive policy environment.

In a release on July 20, the bank said it expects the positive momentum to extend into next year, with GDP growth forecast at 11% in 2027.

Earlier this year, it had forecast the Southeast Asian country's GDP growth at 6.7-7% during the 2026-2030 period.

Meanwhile, in its July 2026 Asian Development Outlook (ADO) update, the ADB maintained its forecast for Vietnam's GDP growth at 7.2% in 2026 and 7% in 2027 - the highest rates projected by the organization among developing economies in Southeast Asia.