The Vietnam Manufacturing Purchasing Managers’ Index (PMI) from S&P Global increased to 51.2 in February from 47.4 in January.

The latest data signaled a return to growth in Vietnam’s manufacturing sector as a renewed rise in new orders fueled increases in output, employment, and purchasing activity. Demand improvements resulted in business confidence strengthening for the third month running.

Meanwhile, cost pressures continued to build, with input prices rising at the fastest pace since the middle of last year. In turn, firms also increased their selling prices at a sharper pace.

The PMI rose back above the 50.0 no-change mark in February, thereby signaling a renewed strengthening in the health of the manufacturing sector following a three-month period of decline.

Central to the strengthening in the health of the sector were signs of improvement in market demand. This helped firms secure new customers and more orders during February for the first time in four months. The solid increase in new business was the sharpest since last August.

New export orders rose faster, expanding for the second month running on the back of brighter international demand. Rising new orders fed through to renewed increases in manufacturing production, employment, and purchasing activity midway through the first quarter.

With market demand improving and new orders returning to growth, optimism regarding the year-ahead outlook for production continued to strengthen.

The PMI is compiled by S&P Global from responses to questionnaires sent to purchasing managers at around 400 manufacturers. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.

Indices range between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month and below 50 an overall decrease.