HSBC'S Purchasing Managers' Index increased to 51.8 last month from 50.3 the previous month, indicating that business conditions in the manufacturing sector have improved significantly.
With figures greater than 50 corresponding to expansion, it signaled the fourth straight month of improvement.
It also represented the second strongest growth in the history of PMI surveys by HSBC.
A press release from the bank January 2 said new orders increased for the third time in the past four months in December thanks to improvement in demand.
This led firms to speed up operations, resulting in the sharpest increase in output since April 2011.
The rising workloads had a positive impact on employment last month, with job creation increasing to the strongest level in three months.
Input prices increased further in December, but manufacturers lowered output prices for the first time in three months due to competitive pressures among other reasons.
Trinh Nguyen, senior HSBC economist for Asia, said the manufacturing sector continued to punch above its weight in stabilizing growth in Vietnam, and that the increase in new orders is a sign of gradually rising domestic demand.
She expected the demand for employment and purchase volumes in the industry to "offset" sluggish growth in other sectors.
HSBC sees 2014 as a "slightly" better year for the country, she added.
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