Vietnam’s manufacturing sector rebounds in July despite export headwinds

The Vietnamese manufacturing sector returned to growth in July as a renewed expansion in new orders supported a faster rise in production, according to the latest report released by the S&P Global on August 1.

The improvement came despite continued export weakness caused by tariffs.

The S&P Global Vietnam Manufacturing Purchasing Managers' Index™ (PMI®) posted 52.4 in July, up from 48.9 in June and back above the 50.0 no-change mark for the first time in four months. As such, the index pointed to a strengthening in the overall health of the manufacturing sector. In fact, the solid improvement in business conditions was the most marked for almost a year.

The improvement in operating conditions coincided with a return to growth of new orders in July. New business expanded for the first time in four months, and at the fastest pace since November last year amid reports of customer demand strengthening.

However, some respondents highlighted the negative impact of US tariffs on new order growth. In fact, new business from abroad continued to fall as a result of tariffs, extending the current sequence of contraction to nine months.

“The renewed increase in new orders helped to support production growth in July. Output rose for the third month running. Moreover, the pace of expansion was marked and the fastest in 11 months,” according to the S&P Global.

Higher output requirements led to a return to growth of purchasing activity. The pace of expansion was the sharpest since August last year.