The world‘s second largest clothing exporter is in an "order shortage"! Global markets are facing a complex situation
Time:2022-08-10
Views:92
Bangladesh, the world‘s second-largest garment exporter after China, is facing the risk of surging costs, hampered by slowing global demand and a domestic energy shortage. The country recovered from the epidemic.
It is worth noting that from May to June this year, global apparel retailing ushered in a complex new situation of loosening the epidemic and squeezing inflation.
Bangladeshi clothing orders plummet
Fazlul Hoque, managing director of Plummy Fashions Ltd., said the company‘s new orders in July were down 20% from a year earlier. The company is a supplier to US clothing giant PVH and Inditex SA‘s Zara.
Hawker said retailers in the European and U.S. markets are either delaying finished product shipments or delaying orders. "It‘s taking a toll on us as inflation soars in our export destinations."
"Uninterrupted energy supply is key to timely product delivery, and we face multiple issues at home and abroad," Hawke said.
1
Energy crisis leads to soaring costs
The cost of doing business in the region has ballooned as the energy crisis hits. The dyeing and washing divisions of Standard Group Ltd., one of the main exporters supplying Gap and H&M, are powered by generators for at least three hours a day. Atiqur Rahman, the company‘s chairman, said in an interview: "Because diesel is expensive, generators cost three times as much to generate electricity as the national grid. Laundry equipment. If we do that, all the fabric will be wasted.”
2
Weaker euro hits apparel demand
In addition, the euro weakened against the dollar, making Bangladesh‘s exports less attractive. Bangladeshi exports are denominated in US dollars.
"Clothing is a non-essential," said Charlie Robertson, global chief economist at Renaissance Capital. "If energy bills are soaring in Europe then people have to cut discretionary spending and clothing will be one of those areas," he said.
3
4.4 million livelihoods at risk
Declining clothing orders are a risk to Bangladesh’s economy, which accounts for more than 10 percent of the country’s GDP and employs 4.4 million people.
This is reminiscent of the cancellation of orders in the early days of the epidemic. Bangladesh‘s garment exports fell to a five-year low of $27.95 billion in the fiscal year ended June 2020 before a gradual recovery. The country‘s apparel exports climbed to a record $42.6 billion in the year to June, accounting for 82 percent of total exports.
4
The pressure of regional competition
Exporters also saw ominous signs in Walmart‘s cut to its full-year profit forecast and pledge to lower prices on clothing. The crisis in Sri Lanka has also had a regional contagion effect, Robertson said. He noted that Pakistan‘s exports have become "much cheaper" due to a weaker currency, "which adds to pressure on Bangladesh, which will see less textile purchases in key export markets such as Europe as sales growth takes a hit".
Global apparel retailing ushered in a complex new situation of epidemic loosening and inflation squeeze from May to June
In the first half of 2022, the global economic recovery will be sluggish, and many key consumer markets around the world will be mired in inflation. Repeatedly high CPI, fragile and unstable supply chains, overt or covert trade barriers, and repeated epidemic nuisances continue to affect the healthy and sustainable development of textile and apparel retailing.
In the face of the complex and severe economic situation, what is the recent trend of the global apparel retail market under the positive and negative effects of the loosening of the epidemic and the squeeze of inflation?
1
America
The U.S. consumer price index (CPI) in June rose by 9.1% year-on-year and 1.3% month-on-month. Both the month-on-month and year-on-year increases were significantly larger than those in May, and the year-on-year increase reached a new high. U.S. retail sales in June rose 1% month-on-month to $680.6 billion, up 8.4% year-on-year. In the same month, U.S. retail sales of apparel (including footwear) were $25.76 billion, down 0.2% year-on-year. The continuous rise in inflation has pushed up the prices of various daily consumer goods, and the "optional consumer goods" represented by clothing, shoes and hats are facing greater sales pressure.
In May, the Canadian CPI rose 7.7% year-on-year, the highest level in 40 years. In the same month, total retail sales in Canada increased by 14.1% year-on-year; sales of apparel products were 2.51 billion Canadian dollars (about 1.96 billion US dollars), a substantial increase of 93.7% under the low base effect last year.
In the first five months of this year, retail sales in Brazil increased by 1.8%. Under the influence of inflation, the consumer confidence of Brazilian residents has been weakened, and the sales of textile and clothing products have not been significantly affected. In May, Brazil‘s textile, apparel and footwear sales increased by 8.3% year-on-year and 3.5% month-on-month.
2
Europe
In June, inflation in the euro area rose to 8.6% under the influence of soaring energy prices, reaching a record high; inflation rates in the United Kingdom, France, Italy and other countries also rose all the way. Official data show that the retail sales growth of clothing products in European countries began to slow down in May, and the low base effect in the same period last year gradually weakened.
In May, German clothing retail sales increased by 71.4% year-on-year; Dutch clothing retail sales increased by 15.7% year-on-year; French textile clothing and leather products retail sales were 4.56 billion euros (about 4.65 billion U.S. dollars), an increase of 360 million euros (about 367 million U.S. dollars) compared with April. USD), the best monthly sales result this year. Compared with the same period last year, the retail sales of textiles, apparel and leather products in France increased by 6.3% year-on-year in May.
Sales of textiles, clothing and footwear in the UK were £5.03 billion ($6.12 billion) in June, up 12% year-on-year.
Turkey‘s May inflation was as high as 73.5%, and the retail sales of textiles, apparel and footwear increased by 58.2% year-on-year in the month, down 1.6% month-on-month.
3
Asia
Many Asian countries are also plagued by imported inflation. From May to June, among many Asian economies, except for a few countries such as China, Japan, and Malaysia, the inflation rate of most Asian countries exceeded 3%.
In May, Japan‘s textile and apparel sales were 763 billion yen (about 5.67 billion US dollars), an increase of 11.8% year-on-year.
Retail sales of clothing and footwear in Singapore rose 98.2% year-on-year in May, showing a trend of "retaliatory consumption". The further loosening of Singapore‘s epidemic prevention measures and the substantial relaxation of entry restrictions have accelerated the recovery of apparel product consumption.
In June, China‘s CPI increased by 2.5% year-on-year, and the increase was stable; the sales of clothing, shoes, hats, needles and textiles above designated size were 119.8 billion yuan, an increase of 1.2% year-on-year. The growth rate turned from negative to positive, and textile and apparel consumption was further recovered. With the stabilization of the epidemic and the further implementation of a number of consumption-promoting policies, it is expected that the consumption of textiles and clothing will continue to stabilize and improve in the second half of the year.
4
Oceania
Australia‘s retail sales of clothing, footwear and personal products reached 2.87 billion Australian dollars (about 2.01 billion US dollars) in May, a year-on-year increase of 14.6%, and consumer demand continued to develop steadily.
5
Africa
In May, affected by the conflict between Russia and Ukraine and rising interest rates in the United States, South Africa‘s CPI increased by 6.5% year-on-year, reaching the highest level since 2017. In that month, the retail sales of textiles, apparel, footwear and leather goods in South Africa was 16 billion rand (about 970 million U.S. dollars), the best monthly sales result this year, but it fell 4% year-on-year, and the growth rate turned negative for the first time in 5 months.
At present, South Africa is entering the peak of the fifth wave of the new crown epidemic, and the frequent occurrence of extreme weather and climate disasters may have a great impact on South Africa‘s consumption recovery.
It is worth noting that from May to June this year, global apparel retailing ushered in a complex new situation of loosening the epidemic and squeezing inflation.
Bangladeshi clothing orders plummet
Fazlul Hoque, managing director of Plummy Fashions Ltd., said the company‘s new orders in July were down 20% from a year earlier. The company is a supplier to US clothing giant PVH and Inditex SA‘s Zara.
Hawker said retailers in the European and U.S. markets are either delaying finished product shipments or delaying orders. "It‘s taking a toll on us as inflation soars in our export destinations."
"Uninterrupted energy supply is key to timely product delivery, and we face multiple issues at home and abroad," Hawke said.
1
Energy crisis leads to soaring costs
The cost of doing business in the region has ballooned as the energy crisis hits. The dyeing and washing divisions of Standard Group Ltd., one of the main exporters supplying Gap and H&M, are powered by generators for at least three hours a day. Atiqur Rahman, the company‘s chairman, said in an interview: "Because diesel is expensive, generators cost three times as much to generate electricity as the national grid. Laundry equipment. If we do that, all the fabric will be wasted.”
2
Weaker euro hits apparel demand
In addition, the euro weakened against the dollar, making Bangladesh‘s exports less attractive. Bangladeshi exports are denominated in US dollars.
"Clothing is a non-essential," said Charlie Robertson, global chief economist at Renaissance Capital. "If energy bills are soaring in Europe then people have to cut discretionary spending and clothing will be one of those areas," he said.
3
4.4 million livelihoods at risk
Declining clothing orders are a risk to Bangladesh’s economy, which accounts for more than 10 percent of the country’s GDP and employs 4.4 million people.
This is reminiscent of the cancellation of orders in the early days of the epidemic. Bangladesh‘s garment exports fell to a five-year low of $27.95 billion in the fiscal year ended June 2020 before a gradual recovery. The country‘s apparel exports climbed to a record $42.6 billion in the year to June, accounting for 82 percent of total exports.
4
The pressure of regional competition
Exporters also saw ominous signs in Walmart‘s cut to its full-year profit forecast and pledge to lower prices on clothing. The crisis in Sri Lanka has also had a regional contagion effect, Robertson said. He noted that Pakistan‘s exports have become "much cheaper" due to a weaker currency, "which adds to pressure on Bangladesh, which will see less textile purchases in key export markets such as Europe as sales growth takes a hit".
Global apparel retailing ushered in a complex new situation of epidemic loosening and inflation squeeze from May to June
In the first half of 2022, the global economic recovery will be sluggish, and many key consumer markets around the world will be mired in inflation. Repeatedly high CPI, fragile and unstable supply chains, overt or covert trade barriers, and repeated epidemic nuisances continue to affect the healthy and sustainable development of textile and apparel retailing.
In the face of the complex and severe economic situation, what is the recent trend of the global apparel retail market under the positive and negative effects of the loosening of the epidemic and the squeeze of inflation?
1
America
The U.S. consumer price index (CPI) in June rose by 9.1% year-on-year and 1.3% month-on-month. Both the month-on-month and year-on-year increases were significantly larger than those in May, and the year-on-year increase reached a new high. U.S. retail sales in June rose 1% month-on-month to $680.6 billion, up 8.4% year-on-year. In the same month, U.S. retail sales of apparel (including footwear) were $25.76 billion, down 0.2% year-on-year. The continuous rise in inflation has pushed up the prices of various daily consumer goods, and the "optional consumer goods" represented by clothing, shoes and hats are facing greater sales pressure.
In May, the Canadian CPI rose 7.7% year-on-year, the highest level in 40 years. In the same month, total retail sales in Canada increased by 14.1% year-on-year; sales of apparel products were 2.51 billion Canadian dollars (about 1.96 billion US dollars), a substantial increase of 93.7% under the low base effect last year.
In the first five months of this year, retail sales in Brazil increased by 1.8%. Under the influence of inflation, the consumer confidence of Brazilian residents has been weakened, and the sales of textile and clothing products have not been significantly affected. In May, Brazil‘s textile, apparel and footwear sales increased by 8.3% year-on-year and 3.5% month-on-month.
2
Europe
In June, inflation in the euro area rose to 8.6% under the influence of soaring energy prices, reaching a record high; inflation rates in the United Kingdom, France, Italy and other countries also rose all the way. Official data show that the retail sales growth of clothing products in European countries began to slow down in May, and the low base effect in the same period last year gradually weakened.
In May, German clothing retail sales increased by 71.4% year-on-year; Dutch clothing retail sales increased by 15.7% year-on-year; French textile clothing and leather products retail sales were 4.56 billion euros (about 4.65 billion U.S. dollars), an increase of 360 million euros (about 367 million U.S. dollars) compared with April. USD), the best monthly sales result this year. Compared with the same period last year, the retail sales of textiles, apparel and leather products in France increased by 6.3% year-on-year in May.
Sales of textiles, clothing and footwear in the UK were £5.03 billion ($6.12 billion) in June, up 12% year-on-year.
Turkey‘s May inflation was as high as 73.5%, and the retail sales of textiles, apparel and footwear increased by 58.2% year-on-year in the month, down 1.6% month-on-month.
3
Asia
Many Asian countries are also plagued by imported inflation. From May to June, among many Asian economies, except for a few countries such as China, Japan, and Malaysia, the inflation rate of most Asian countries exceeded 3%.
In May, Japan‘s textile and apparel sales were 763 billion yen (about 5.67 billion US dollars), an increase of 11.8% year-on-year.
Retail sales of clothing and footwear in Singapore rose 98.2% year-on-year in May, showing a trend of "retaliatory consumption". The further loosening of Singapore‘s epidemic prevention measures and the substantial relaxation of entry restrictions have accelerated the recovery of apparel product consumption.
In June, China‘s CPI increased by 2.5% year-on-year, and the increase was stable; the sales of clothing, shoes, hats, needles and textiles above designated size were 119.8 billion yuan, an increase of 1.2% year-on-year. The growth rate turned from negative to positive, and textile and apparel consumption was further recovered. With the stabilization of the epidemic and the further implementation of a number of consumption-promoting policies, it is expected that the consumption of textiles and clothing will continue to stabilize and improve in the second half of the year.
4
Oceania
Australia‘s retail sales of clothing, footwear and personal products reached 2.87 billion Australian dollars (about 2.01 billion US dollars) in May, a year-on-year increase of 14.6%, and consumer demand continued to develop steadily.
5
Africa
In May, affected by the conflict between Russia and Ukraine and rising interest rates in the United States, South Africa‘s CPI increased by 6.5% year-on-year, reaching the highest level since 2017. In that month, the retail sales of textiles, apparel, footwear and leather goods in South Africa was 16 billion rand (about 970 million U.S. dollars), the best monthly sales result this year, but it fell 4% year-on-year, and the growth rate turned negative for the first time in 5 months.
At present, South Africa is entering the peak of the fifth wave of the new crown epidemic, and the frequent occurrence of extreme weather and climate disasters may have a great impact on South Africa‘s consumption recovery.
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