Manufacturing activity in Vietnam continued to grow in August, marking the fifth consecutive month of improvement, although at a slower rate.

According to S&P Global, there were additional increases in output and new orders.

Vietnam's Manufacturing Purchasing Managers' Index (PMI) recorded 52.4 in August, down from 54.7 in July, but still indicating a strong improvement in business conditions midway through the third quarter.

In addition, operating conditions have improved for five consecutive months, according to S&P Global's monthly report. The index moved above the 50.0 mark in April, separating growth from contraction, rising to 50.3 from 49.9 in March, The Investor reports.

The sector's improved health was driven by continued strong increases in output and new orders, with expansion rates remaining robust even though they moderated from the exceptionally high levels observed in June and July.

Moreover, increased customer demand led to a rise in new orders, prompting firms to boost production. Additionally, new export orders grew for the fifth consecutive month.

Although both input costs and selling prices continued to rise, the inflation rates significantly slowed from July, reaching their lowest level in four months.

The robust growth in new orders and reduced cost pressures prompted manufacturers to significantly boost their purchasing activity in August.

Furthermore, the rate of growth accelerated for the fourth consecutive month, achieving its fastest pace since May 2022.

In contrast to the trend in purchasing activity, manufacturers experienced a decline in employment for the first time in three months, due to resignations and the conclusion of some temporary contracts.

Despite this, manufacturers remain optimistic about future output growth, driven by expectations of continued improvements in customer demand and new orders. However, sentiment fell for the second consecutive month, reaching its lowest level since January.

“As expected, the Vietnamese manufacturing sector saw a slowdown in growth of output and new orders from the particularly elevated rates seen in June and July. Those increases were always going to be hard to sustain and rates of expansion remained marked, so there is little cause for concern on that front,” said Andrew Harker, economics director at S&P Global Market Intelligence.

“The news was better in terms of inflation, with both input costs and output prices rising at much weaker rates in August. In fact, this was reportedly a factor contributing to sustained new order growth,” he went on to add.