The S&P Global Vietnam Manufacturing Purchasing Managers' Index (PMI) dropped to 48.9 in June from 49.8 in May, posting below the 50.0 no-change mark for the third consecutive month and signalling a modest deterioration in business conditions as the first half of the year drew to a close, according to the S&P Global's latest report released on July 1.

Central to the latest worsening in the overall health of the sector was a third successive fall in new orders. New business decreased modestly in June, but at a faster pace than in May.

Demand conditions worsened particularly sharply in export markets, with new business from abroad declining to a much larger degree than total new orders. A number of respondents indicated that US tariffs had been behind the fall in new export orders.

Despite ongoing demand weakness, manufacturers continued to increase their production volumes in June. Output rose for the second month running, albeit only slightly and at a slower pace than in May.

Business confidence continued to recover from April's 44-month low. Hopes for more stable market conditions and a reduction in trade tensions were among the factors supporting the optimistic outlook, which was nonetheless weaker than the series average.