U.S. Textile and Apparel Retail Sales Inch Higher

U.S. demand witnessing an upturn

Few industries have been hurt as badly by the recession as retail, the front lines of the battlefield where businesses try to separate consumers from their money. The once free-spending consumers in the United States was not going back to old ways with real wages in the private sector going down and rising unemployment levels during the economic downturn. Remember that in the first quarter 2009, U.S. residents' purchases of goods and services (regardless of country of origin) dropped at an annualized pace of 7.5%, the largest decline since 1980. U.S. total textile and garment imports at the end of 2009 posted 13.07 percent decline from a year earlier.

Fortunately, the Obama administration had taken some targeted steps to address the situation, such as the HIRE Act, which provides tax incentives for businesses to hire unemployed workers and retain them over time. The law also has provisions to spur infrastructure spending. "By almost every indicator, the U.S. economy is finally on the road to recovery," said Christina Romer, chair of the Council of Economic Advisers at an event held at the Woodrow Wilson School of Public and International Affairs on Apr. 17.

Growing confidence in the recovery, particularly brightening prospects in the job market, is encouraging households to tap into their savings to fund purchases of goods. In March 2010, retail sales in the United States rose 1.6 per cent, the third consecutive monthly gain. The 1.6 per cent gain was up from February's revised 0.5 per cent gain. Economists surveyed by Thomson Reuters had expected a gain of 1.2 per cent. Gains were widespread as car dealers, home furnishing stores, building suppliers, clothing retailers and general merchandise stores all reported increases. "This surge in spending reflects a decline in the saving rate rather than a surge in income," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts.

Market shares up in the U.S.

From Jan. to Feb. 2010, U.S. total textile and garment imports posted 0.82 percent increase from a year earlier. At the same time, the textile and apparel imports from China reversed the downward trend. China's accumulated textile and garment export value to the United States increased by 12.45% to $5.212 billion from Jan. to Feb. 2010. China strengthened its lead as the USA??s biggest textile and apparel supplier in both value and volume terms.

Table 1. U.S. textile and garment imports by country

Source: U.S. Department of Commerce

The market growth was attributed to changes in China??s industry structure. Chinese enterprises made a good preparation before the coming of ??coldness??. They made structural adjustment towards products and promotion on management technologies by which they take active part in the upstream competition of the industrial chain, which not only bring them with great profits but also open market wider.

Keeping a watchful eye on hotspot products

Sales at U.S. retailers rose more strongly than expected in March offering hope the recovery of Chinese textile and apparel export sector would continue. Despite signs the recovery from the worst downturn since the Great Depression may be gaining momentum, we highlight the necessity for Chinese textile businesses to keep a watchful eye on restraints.

Exports to the U.S. for 8 Chinese textile and apparel products remain robust, with jumpers up 50 per cent y/y. As imports have risen, the U.S. textile industry has experienced losses in employment and an increased number of plant closing. Pressure is likely to be increased on U.S. policymakers to resort to contingency measures and other actions that restrict free trade, particularly if the upward trend in China export persists.

It is to be noticed that the import volume of category 618 and 832 are up 582.51% and 783.6% respectively from Jan. to Feb. 2010, according to U.S. Department of Commerce.

Table 2. Top 8 imported products from China to the United States with the largest increases in volume and the biggest drop in price from Jan. to Feb. 2010

Source: U.S. Department of Commerce