According to a newly released report by S&P Global Market Intelligence, the number of new orders in the manufacturing sector continued to decline in May 2025. Survey participants said that changes in tariff policies along with weakening market demand were the main reasons for this decline.
Notably, the sharpest decline was recorded in export orders, clearly reflecting the pressure that Vietnamese manufacturers are facing in the international market. However, in addition to the slowdown in orders, production output tended to increase in May, after declining in the previous month. Part of the reason is that the tariff environment seems to have stabilized, creating conditions for businesses to adjust and improve operational capacity.
Business confidence also improved, although it remains below historical averages. Some businesses remain cautious about the outlook, fearing that unexpected tax changes could continue to impact future orders.
On the labor side, the manufacturing workforce continued to shrink, mainly due to fewer orders and some voluntary resignations. However, the decline was not too large, considered the lightest since October 2024.
The recovery in output also led to a slight increase in raw material purchases, ending a two-month decline. However, inventories continued to decline as businesses were cautious in stockpiling inputs and finished goods.
Amid weak demand, some suppliers were forced to reduce their product prices, helping input costs fall for the first time since July 2023. As a result, manufacturing enterprises also adjusted their output prices lower, marking the fifth consecutive month of price reductions.
The S&P Global Manufacturing Purchasing Managers' Index (PMI) rose to 49.8 in May from 45.6 in April. While still below the 50-point mark that indicates expansion, it is a sign that business conditions are stabilizing.
Andrew Harker, Chief Economist at S&P Global Market Intelligence, said that tax policy remains the main factor driving the movement of Vietnam's manufacturing industry. According to him, the somewhat more stable US tariffs in May have contributed to improving output and restoring some positive sentiment among businesses. However, the continued sharp decline in export orders is a warning that the risks are not likely to end soon.
He also predicted that in the coming time, the market will closely monitor tariff decisions from the US - a factor that could greatly determine the direction of Vietnam's manufacturing industry in the second half of 2025.
Source: https://baodaknong.vn/ap-luc-thue-quan-tu-my-don-hang-xuat-khau-moi-cua-viet-nam-sut-giam-254481.html
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