According to data released by S&P Global, Vietnam’s Manufacturing Purchasing Managers’ Index (PMI) rose to 54.3 in February, up from 52.5 in January, marking the highest level in four months. The latest reading signaled a significant month-on-month improvement in the health of the sector, extending the sequence of improving business conditions to eight consecutive months.

Orders improve, sustaining February’s growth momentum

A deeper look at the survey indicators shows that manufacturing output expanded sharply in February, recording the fastest growth rate in 19 months. Survey respondents attributed the increase to advance production ahead of deliveries and stronger customer demand.

The acceleration in production also led to a reduction in finished goods inventories, which fell to one of the lowest levels recorded over the past two years.

Improved demand conditions contributed to a notable rise in new orders. The survey indicated that total new orders increased for the sixth consecutive month, with the rate of growth the fastest since October last year. Although new export orders were unchanged from January, overall new business continued to expand.

The rise in total new orders and production requirements resulted in stronger increases in both employment and purchasing activity during the middle of the first quarter of 2026. Staffing levels expanded for the fifth successive month, with the pace of job creation the fastest since September 2022.

Input buying also increased significantly, second only to the spike recorded in December 2025. Higher demand for inputs enabled suppliers to raise prices in February. As a result, manufacturers’ input costs rose sharply, with the rate of increase the steepest since June 2022. In addition to higher supplier prices, some firms also reported increased transportation costs.

In response to rising operating expenses, manufacturers raised their selling prices accordingly. However, the pace of output price inflation was unchanged from the 45-month high recorded at the start of 2026.

Overall, improving market demand and expectations of further growth in new orders boosted optimism among Vietnamese manufacturers regarding output prospects this year. Business confidence in February rose for the fifth consecutive month, reaching its highest level since September 2022.

Andrew Harker, Economics Director at S&P Global Market Intelligence, commented that Vietnam’s manufacturing sector was able to build on the growth seen in January and deliver an even stronger performance in February. Firms have made a positive start to 2026 and are at their most confident about the future in nearly three and a half years.

According to Andrew Harker, most key survey variables showed stronger growth, including output, new orders, employment and purchasing activity. However, export performance remained subdued, with new foreign orders unchanged from January.

“Stronger demand has led to mounting price pressures, both in terms of firms’ input costs and the prices they charge customers. It will be important to monitor data closely in the coming months to see whether rising prices begin to dampen demand,” Andrew Harker added.