Vietnam Factory Growth Accelerates as Hiring Returns in July

Vietnam’s manufacturing sector strengthened in July 2026, with faster growth in production, new orders and exports helping companies resume hiring after four consecutive months of job cuts.

The S&P Global Vietnam Manufacturing Purchasing Managers’ Index rose to 52.9 in July from 51.8 in June, marking the strongest monthly improvement since February and extending the sector’s expansion to 13 consecutive months.

A PMI reading above 50 indicates improving manufacturing conditions.

Production Growth Reaches Five-Month High

Factory output increased at its fastest pace in five months as manufacturers responded to stronger customer demand.

Production has now expanded continuously since May 2025, with July’s improvement supported by another increase in new orders.

New business rose for a third consecutive month, while export demand showed a particularly strong recovery.

New export orders increased at their fastest pace since July 2024, indicating improving overseas demand for Vietnamese manufactured goods.

Manufacturers Resume Hiring

Improving demand also encouraged manufacturers to expand their workforces.

Employment increased for the first time in five months, reversing the hiring weakness seen earlier in the year.

Despite the increase in staffing, manufacturers continued to report growing backlogs of unfinished work as new orders increased faster than production capacity.

The rise in outstanding workloads suggests that factories are continuing to experience pressure as demand strengthens.

Purchasing Activity Jumps

Manufacturers also significantly increased their purchases of raw materials and other production inputs.

Purchasing activity rose at its fastest pace in almost four-and-a-half years, primarily as companies increased material requirements to support higher production.

Some manufacturers also purchased inputs ahead of immediate requirements in preparation for future production.

However, inventories of both raw materials and finished goods declined during the month as manufacturers used available stocks to support production and fulfil customer orders.

Cost Pressures Begin to Ease

Manufacturing cost pressures moderated in July.

While some companies continued to face higher shipping and fuel expenses, lower oil prices helped reduce costs for others.

As a result, both input prices and factory selling prices increased at their slowest rates since September 2025.

Supply-chain conditions also showed signs of improvement.

Supplier delivery times continued to lengthen, but delays were the least severe since May 2025, suggesting some easing of logistics pressure.

Business Confidence Improves

Vietnamese manufacturers became more optimistic about future production during July.

Business confidence reached a five-month high, supported by expectations for continued order growth and plans to expand production capacity.

However, confidence remained below levels recorded before the escalation of conflict in the Middle East, with manufacturers continuing to monitor geopolitical and supply-chain risks.

S&P Global Market Intelligence Economics Director Andrew Harker said the second half of 2026 had started strongly for Vietnam’s manufacturing sector, supported by softer inflation and improving domestic and overseas demand.

Vietnam Manufacturing Enters Second Half With Stronger Momentum

July’s PMI results indicate improving momentum across Vietnam’s manufacturing sector.

Stronger production, rising export orders, renewed hiring and increased purchasing activity all point to improving factory conditions at the start of the second half of 2026.

While geopolitical uncertainty and supply-chain disruption remain potential risks, Vietnam’s manufacturers are entering the coming months with stronger demand and improving confidence.