Inflation in the United States puts pressure on textile exports

DNHN - Due to high inflation, textile demand in the United States may fall in the second half of 2022. Consumer inflation in the United States increased to 9.1% in June, a level not seen in more than four decades.

VnDirect Securities stated in research updating the prognosis for the textile sector in the last six months of 2022 that rising inflation may harm demand for fashion shopping in the United States.

After the lockdown was released, there was a surge in demand in the United States. Americans have returned to work, increasing the demand for office supplies such as vests and shirts. As a result, the value of US textile and garment imports climbed by 30.9% in the first six months of 2022, reaching 66.3 billion USD. 

However, due to rising inflation, textile demand in the United States may fall in the second half of 2022. Consumer inflation in the United States increased to 9.1% in June, a level not seen in more than four decades. In the second half of 2022, demand for high-end apparel goods such as shirts and t-shirts manufactured from recycled and (higher-priced) cotton fibres will slow.

Due to heavy inventory and inflationary pressure, US clients have reduced pre-order time from 6 months to 3 months, according to garment industry leaders. TCM, STK, and ADS have adequate orders for Q3/22, however, some clients have cancelled purchases owing to large inventories. Meanwhile, orders slowed in Q4/22 owing to inflation fears.

Furthermore, analysts predict that the textile and garment sector will confront exchange rate risk in the second half of 2022, putting pressure on the profit development momentum of textile and garment firms exporting to the EU. On 07/07/2022, the euro fell below USD 1.02 for the first time in 20 years, almost comparable to the USD.

PV