Global Textile Industry Faces Challenges Amidst Weakening Demand and Rising Costs
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- Published: Tuesday, 31 October 2023 03:32
The international textile industry, a cornerstone of global manufacturing, is navigating a challenging landscape marked by cautious sentiment, rising costs, and persistently weak demand, according to the 22nd Global Textile Industry Survey (GTIS) conducted by the International Textile Manufacturers Federation (ITMF) in September 2023.
Cautious Sentiment Prevails
Survey participants from across the textile value chain exhibited a sense of caution as they grappled with current business challenges. The indicator for the business situation stood at -27 percentage points (pp). This challenging environment is largely attributed to the twin challenges of escalating costs and tepid demand.
Stagnant Business Expectations
Business expectations have remained largely unchanged since July, hovering around +20 pp. This figure had seen a shift into positive territory at the start of 2023 with the hope that the Chinese economy would provide a much-needed boost. However, this optimism has yet to materialize, and the global textile industry continues to tread carefully.
Orders at Minimum Levels
The recovery in order intake experienced in May 2023 was short-lived, with July and September witnessing flat and weak order levels (-28 pp). The entire textile value chain finds itself operating at minimum order levels. The industry's fate is intricately tied to the willingness of brands and retailers to increase their orders, as it's only through this that a turnaround can be expected.
Growing Concerns Amidst High Inflation
The global textile value chain's major concern remains the persistent weakening demand, which has been a pressing issue for the past year. This concern has been exacerbated by the high inflation rates witnessed in recent months, driven in large part by soaring energy and raw material prices. Despite these worries, participants appear less concerned about order cancellations, and inventory levels remain stable across the textile value chain.
Order Backlog and Capacity Utilization
One glimmer of hope is seen in the order backlog, which saw a slight increase globally, rising from 1.9 months in July to 2.2 months in September 2023. However, this figure had been on a steady decline since the end of 2021. On the flip side, the average capacity utilization rate has dropped once again on a global scale, with manufacturers expecting this rate to remain low in the coming six months (currently standing at 69%).
A Glimpse into the Future
While challenges persist, there is no imminent sign of a hard landing for the global economy. The industry awaits a turnaround, which largely hinges on improved demand and a reduction in the cost pressures it currently faces.
In conclusion, the global textile industry stands at a crossroads, faced with a cautious outlook, rising costs, and persistent challenges. The path forward requires a collaborative effort across the textile value chain, with hopes pinned on a revival of demand and a reduction in inflationary pressures. Only time will tell if these challenges will be surmounted, allowing the industry to regain its footing on the global stage.