Illustration photo.

However, January data signaled a further marked decline in manufacturing production, albeit one that was slightly softer than seen in December.

Lower new orders were often behind falling output, with some firms indicating that customers had sufficient stock holdings and so didn't need to purchase at present.

Total new orders were down for the third month running in January as demand conditions remained challenging. That said, there were some signs of improvement, particularly with regards to new export orders which rose for the first time in three months.

Andrew Harker, Economics Director at S&P Global Market Intelligence, said: “Although demand conditions for Vietnamese manufacturing firms remained challenging at the start of 2023, leading to further declines in output, new orders and employment, there were some more positive signs from the latest PMI survey. One of the main positives in January was a renewed expansion in new export orders, with the decline in total new business softening as a result.”

The loosening of COVID-19 restrictions in Mainland China, plus signs that downturns in Europe and the US may be less severe than feared, provided optimism that growth in Viet Nam could be around the corner, he said.

Indeed, business confidence improved to a three-month high at the start of the year. S&P Global Market Intelligence is forecasting a rise in industrial production of 6.6 percent in 2023./.