Manufacturing enterprises are straining to maintain growth in the first half of the year

“Orders these days are temporarily better than before, but the pressure is getting higher and higher. The already thin profit margin is now about to become ‘invisible’,” the CEO of a garment company in Ho Chi Minh City commented in early July.

Not only in Ho Chi Minh City, from the beginning of the year until now, many manufacturers, despite being able to maintain orders and exports, still have to “stretch themselves” to maintain their performance.

According to data from the Department of Statistics (Ministry of Finance), the export turnover of goods in 6 months reached more than 266.5 billion USD, up 21% over the same period last year. But behind this result is the pressure that manufacturers and exporters have faced in the past half year, especially with traditional industries such as textiles, footwear or seafood.

In fact, the index of industrial production (IIP) of the apparel manufacturing industry increased by 10% in 6 months, ranked in the low group along with textile (10%) and leather (4%). Meanwhile, the IIP in the first half of this year of the processing and manufacturing industry was 11.4%.

“Some traditional industries have low growth and are under pressure to erode profit margins due to the cost of imported raw materials and high international transport costs, so businesses are cautious in expanding their scale,” the Statistics Department said.

Other manufacturing and export industries also face a lot of pressure from customer requirements to logistics costs. For example, seafood brought in nearly 5.8 billion USD, an increase of 12.8%, but orders tend to be short, divided, and competitively priced, according to the Vietnam Association of Seafood Exporters and Producers (VASEP).

The four-month-long Middle East conflict put great pressure on shipping routes, especially through the Suez Canal. This increases shipping rates and lengthens delivery times for industries, including furniture wood to key markets such as the US and Europe.

In April, the purchasing managers index (PMI) survey of S&P Global (USA) said that the Middle East conflict pushed input costs and output prices to increase the fastest in 15 years. This fact caused new orders to decline for the first time in 8 months.

After peak pressure in April, new orders began to recover in May and June thanks to improved demand. Last month, PMI reached 51.8 points, down from 52.8 in May but still above the 50 threshold, meaning there was an improvement.

“Vietnam’s manufacturing industry ended the first half of this year with a positive signal, when both the number of new orders and output maintained increasing momentum,” said Mr. Andrew Harker, Economic Director at S&P Global Market Intelligence.

Signs show that manufacturing businesses are more optimistic in the coming time, but the business environment still has many challenges. According to a survey by the Department of Statistics, 39.4% of processing and manufacturing enterprises rated their business trends in the third quarter as better, higher than 36.3% in the second quarter.

The trend is similar at the economic engine of Ho Chi Minh City, with 37.1% evaluating this quarter’s situation as more favorable than the previous quarter. About 42.5% of businesses said they felt stable and 20.4% thought it was more difficult.

The war in the Middle East cooled down when the US – Iran reached a negotiating agreement, but fear of risks and pressure to avoid tariffs pushed importers to collect goods early, as early as the third quarter, according to analysts.

Mr. Andrew Harker assessed that Vietnam’s manufacturing industry in general is entering the second half of the year with a positive foundation. “Companies will have many advantages to maintain growth momentum if the international environment is more stable for the remainder of 2026,” he stated.

However, the challenge is not over yet. According to S&P Global, business sentiment among Vietnamese manufacturers is still lower than the level before the Middle East conflict. “What was less positive in June was that employment continued to decline, although output and new orders increased,” Mr. Andrew added.

Along with that, transportation costs have not cooled down, with container freight rates reaching their highest level in nearly 2 years. The Drewry World Container Index recently exceeded the mark of 4,500 USD per FEU, meaning the average spot shipping cost of a 40-foot container is 4,500 USD, an increase of about 40% over the same period.

A survey by the Ho Chi Minh City Statistics Department also shows that the two biggest barriers for manufacturing businesses are increased competition for domestic products (46.6%) and decreased domestic demand (46.2%). Besides, there is pressure from high interest rates (34.3%), low international demand (30.7%) and financial difficulties (25.6%).

In fact, the IIP index in the first 6 months of the year is estimated to increase by 10.8% over the same period in 2025, but this number is still lower than the whole year target (12-14%). As for the localities, according to the Department of Statistics, in the first half of the year, half of the localities had an IIP index increase of less than 12%.

To promote industrial production and create growth momentum this year, the Statistics Department recommends that businesses need to diversify supply sources, control logistics costs and proactively manage the supply chain. The management agency needs to remove procedures to clear materials, promote disbursement of public investment, ensure energy security and apply AI to digital transformation.