HSBC's PMI for Vietnam rose to 47.9 in August from July's 43.6. Any figure below 50 indicates a contraction, with the August figure indicating only a modest deterioration, according to HSBC.

"While business conditions in Vietnam remain challenging, the slowdown of the rate of manufacturing deterioration suggests that economic activities will likely gradually recover" in the fourth quarter, HSBC Asia economist Trinh Nguyen said.

The data come after a slew of PMI readings released Monday showed manufacturing slowing across Asia, led by China, with only Indonesia showing faster manufacturing growth than the month before.

Mr. Nguyen said Vietnam's gross domestic product growth would likely slow to 5.1% this year from 5.9% last year, but rising inflation would prevent the central bank from cutting interest rates to stimulate the economy, which may mean could turn to administrative measures to boost spending.

By Michael S. Arnold - The Wall Streey Journal - September 4, 2012