Manufacturing activity in Vietnam continued to grow in October 2026, but the pace of output and new orders growth slowed amid weakening external demand and rising costs. This is shown by the latest data from S&P Global, cited by Vietnam Investment Review.
The Purchasing Managers' Index (PMI) in manufacturing rose to 52.3 points in October compared to 51.9 points in September. A value above 50 points indicates expansion in manufacturing activity, and below this limit - contraction.
Despite the increase in the index, business conditions are improving at a slower pace across a number of key indicators. Vietnam's manufacturing sector has posted a 16th consecutive month of positive growth, but companies are increasingly facing constraints related to international trade and supply.
Export orders fall
Total new orders continued to increase for a sixth consecutive month, supported by consumer demand. However, the growth rate was the weakest in this period, with a decline in new orders from abroad limiting the positive dynamics.
Manufacturing output also increased, but at the slowest pace in the last six months.
Some of the companies surveyed indicated that difficulties in securing raw materials had limited their ability to increase production despite the presence of new orders.
Supply chain problems are also deepening due to transportation difficulties. Suppliers’ delivery times have lengthened the most since April.
Expensive oil increases costs
Rising oil, fuel and transportation prices continue to put pressure on manufacturing companies in Vietnam.
In October, the cost of raw materials and other production inputs increased at the fastest rate since June. In response, companies have accelerated their sales price increases, trying to offset some of the additional costs.
This creates additional challenges for the country’s export-oriented industry, which must maintain its competitiveness in international markets in the face of more expensive logistics and uncertain external demand.
According to S&P Global Market Intelligence economist Andrew Harker, Vietnamese companies are increasingly struggling to maintain growth. The main obstacles come from the international economic environment, including rising fuel and transport prices and problems with imports and exports.
Employment falls for third consecutive month
Despite the continued expansion of production, employment in the industrial sector has fallen for a third consecutive month.
The decline remains relatively limited, with some companies reporting employee layoffs.
At the same time, the volume of unfulfilled orders has decreased slightly. This is due both to the slower arrival of new orders and the ability of enterprises to process the backlog.
Inventories of finished goods also continue to shrink as manufacturers use their inventories to meet demand. A decrease was also reported in inventories of production materials.
Business remains optimistic about the coming year
Despite the difficulties, manufacturers' expectations for the next 12 months are improving.
Business optimism reaches its highest level in the last eight months, supported by hopes for better availability of raw materials and gradual stabilization of market conditions.
However, company confidence remains weaker compared to the period before the start of the war in the Middle East.
Data show that Vietnam maintains positive dynamics in the industry, but the sustainability of growth increasingly depends on international demand, energy prices and the restoration of normal operation of global supply chains.