US' apparel prices surge amid import cost fluctuations: Cotton Inc

In seasonally adjusted terms, the average import cost per square-metre equivalent (SME) of cotton-dominant apparel decreased -1.2 per cent month-over-month. Although average costs have moved lower than the post-COVID peak (-9.7 per cent relative to the value of $4.31/SME in November 2022), they remain elevated compared to where they were before the pandemic (averaged $3.45/SME in 2019, the value in July was 12.9 per cent higher), as per the US Macroeconomic Indicators & the Cotton Supply Chain - September 2023 by Cotton Inc.

Import volumes shifted sharply lower in the second half of 2022 as import costs increased and concerns about the economy rose alongside interest rates. In terms of weight volume, recent apparel imports have been at some of the lowest levels in decades (excluding the months most affected by COVID). Those volumes have been moving slightly higher over the past three months but remain low. The low level of imports has contrasted with the relative stability of consumer spending on apparel.

In August, the Conference Board's Consumer Confidence Index fell to 106.1 from 114.0 in July, hovering near a twelve-month average. July saw a surge in inflation-adjusted consumer spending in the US, growing 0.6 per cent month-over-month and 3 per cent year-over-year—the peak in almost 18 months. Although apparel spending escalated by 1.3 per cent month-over-month in July, it experienced a 0.4 per cent decrease year-over-year, marking the fifth straight month of decline. Regardless, the apparel purchasing rate is still over 20 per cent higher compared to 2019.

While job gains have slowed recently, the US economy has remained more robust than anticipated amid inflation and rising interest rates that began escalating in March 2022. Eighteen months later, there is a more optimistic outlook on the US GDP, and predictions suggest that a recession in 2023 and 2024 might be avoided. This stability is attributed to a resilient labour market, with unemployment rates staying below 4 per cent, a scenario rarely seen in US history. Moreover, despite the reduced pace of wage increments, they have been outpacing consumer prices since May, hinting at stronger spending power, the report added.

Fibre2Fashion News Desk (KD)