Vietnam Manufacturing: Production Rises for Four Consecutive Months, but Export Orders Fall — S&P Global Survey
According to the latest survey by S&P Global, Vietnam’s manufacturing output continued to grow in August, marking the fourth consecutive month of expansion. However, a decline in export orders, raw material shortages, and the impact of tariffs leave the recovery outlook uncertain.
In August 2025, Vietnam’s manufacturing sector recorded four consecutive months of production growth. However, the pace of growth slowed compared with July, reflecting weaker demand.
S&P Global reported that the Manufacturing Purchasing Managers’ Index (PMI)* for August stood at 50.4, down from 52.4 in July. While a reading above 50 indicates an improvement in business conditions, the strength of the recovery remained modest.
Key Survey Findings:
New Orders: After a temporary increase in July, new orders fell again in August. Export orders have declined for ten consecutive months, affected by U.S. tariff issues.
Employment: In line with falling new orders, employment contracted for the 11th consecutive month, resulting in excess production capacity.
Inventory & Production Activity: Finished goods inventories decreased, while purchasing of raw materials rose for the second consecutive month in anticipation of future demand improvement.
Supply Chain: Lead times extended due to raw material shortages. Input costs recorded the highest growth for 2025.
Selling Prices: Reflecting rising costs, selling prices increased for the third consecutive month.
Business Sentiment: Confidence recovered to its highest level in six months but remained below average, with concerns about the global economy limiting optimism.
Andrew Harker, Economic Director at S&P Global, commented:
"While it was positive to see output expand again during August, a renewed fall in new orders calls into question how long firms will be able to keep increasing production. The drop in new sales was led by exports, which decreased solidly again as issues around tariffs continued to impact the sector."
“In August, it was encouraging that production expanded, but continued declines in new orders raise questions about sustaining output growth. Stabilization of tariff issues and a recovery in demand are expected going forward.”
*PMI = Purchasing Manager’s Index. The PMI is a leading indicator that provides early insights into economic trends, often ahead of other macroeconomic indicators such as GDP. It gauges business sentiment among purchasing managers in manufacturing and services, who are closely aware of product demand and client trends. The PMI surveys them on:
Production levels
Changes in new orders
Backlogs of orders
Employment levels
Quantities and prices of purchased raw materials
KBC-LINK Perspective:
For Japanese companies: While raw material shortages and rising costs pose risks, there are opportunities for efficient supply and technology provision.
For the Vietnamese market overall: For export-dependent manufacturers, tariff policies and international logistics will be key factors shaping future growth.
Talent and productivity: There is room for improvement, and collaboration with Japanese firms can enhance competitiveness.
Sources:
S&P Global Vietnam Manufacturing PMI Survey (August 2025), The Investor, September 4, 2025 https://theinvestor.vn/vietnams-production-rises-for-four-straight-months-new-export-orders-continue-to-fall-sp-global-d16877.html
Vietnam News, September 4, 2025 https://vietnamnews.vn/economy/1724533/viet-nam-s-manufacturing-sails-with-cautious-optimism-amid-challenges.html
Daiwa Securities Glossary: Financial & Securities Terms https://www.daiwa.jp/glossary/YST0537.html
Edited by: KBC-LINK Editorial Team
