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Riding on optimism, US textile & apparel outlook positive

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The US domestic textile and apparel industry is on a positive growth trajectory as the sector has seen a good year until now. There’s support for macro-economic growth with the country’s gross domestic product expected to grow at more than three-per cent annually. What’s added to their optimism is the low interest rates spurred both by household and business spending, sharp drop in energy costs, big increases in net worth engendered by Wall Street and housing recoveries, and, improving consumer optimism as unemployment continues to edge lower is proof that the picture looks rosy enough.

 

Factors contributing to growth

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Indeed general economic growth boosts textile and apparel industry.But, other factors such as a slowdown in import, rising overseas costs, growing interest in reshoring, enhanced innovation and marketing strategies, strong capital spending, rising profits, and a more level playing field too have contributed to the growth of this sector.

 

What’s more the subsectors too, help in benefiting the overall industry in many ways. Basic mill products such as fibres and fabrics are set to lead the increase, but highly fabricated items such as carpets, household furnishings and industrial products would also move up at a fast pace after seeing flat growth in 2014.

 

Non-woven fabrics, fabrics designed for active wear, the denim market have all done well. Besides, overall apparel shipments are likely to rise by another five per cent over the New Year. The US domestic producers would meet all demands, as industry capacity is more than enough to meet consumer demand. Also, the fact that overseas suppliers, need to remain both willing and able to fill any and all orders emerging from the US.

 

Imports though, aren’t the only reason for current excess capacity. Another key factor is the need for more efficient capacity to survive today’s strong international competitive pressures. Perhaps this explains US-based mills spent upwards of a billion dollars on new plants and equipment despite less-than-desired demand. Moreover demand and supply trends will be influenced by incoming shipments from abroad that will consist of the biggest share of US textile and apparel demand. Yet, it is believed that big domestic losses of the past years are over.

 

The cost of fibre, especially cotton, has dropped greatly through the years and according to studies, 2015 shall witness further dips. Current projections for 2014-15 marketing year point to another big global crop of 120 million bales. On the other hand, world usage is put at about 114 million bales. This supply-demand differential means that the current year’s ending stocks could rise to nearly 107.5 million bales.

Stable demand, supply, a positive factor

Another factor is China’s huge stockpile of cotton, the equivalent of a big 1.65 year’s supply. Such big collection hanging over the market could be a major factor in inhibiting the fibre’s recovery. Also, man-made fibres affect the market, but prices have remained stable lately. Man-made prices have a long history of not rising. In fact, they have inched up less than 1 per cent annually over the past three decades and there may hardly be any change in this pattern.

 

Labour too may not be a problem as pay hikes have remained modest and continuing productivity gains, mostly, are offsetting the impact of any higher pay rates. Worker efficiency has been rising. According to the National Council of Textile Organizations (NCTO), mills have increased their productivity by 24 per cent over the past decade, making textiles one of the top industries as far as boosting efficiency is concerned.

 

The bottomline is textiles and apparel industry in the US is headed towards a bright year.

 
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