US apparel retail prices dip in Nov 2023, consumer confidence surge

Import costs showed a similar trend, with the average price per square metre equivalent (SME) of cotton-dominant apparel falling for the sixth consecutive month. Since reaching a post-COVID peak of $4.26/SME in November 2022, import prices have decreased by 14 per cent. However, the average price in November 2023 remained 6 per cent above the 2019 average, which was $3.65/SME in November and $3.45 on average for the year.

Consumer confidence experienced a significant boost in December, as evidenced by the Conference Board’s Index of Consumer Confidence, which rose by 9.7 points to 110.7. This surge, the largest monthly increase since the stimulus payments in March 2021, was attributed to an improved outlook on current economic conditions and a less pessimistic view of the economy's future, although longer-term perspectives remain cautious, Cotton Inc said in its latest Executive Cotton Update—US Macroeconomic Indicators & the Cotton Supply Chain - January 2024.

In terms of overall consumer spending, November saw a 0.3 per cent month-over-month increase in inflation-adjusted terms, with a year-over-year increase of 2.7 per cent. Notably, consumer spending on apparel rebounded in November, growing by 1.7 per cent month-over-month after a 0.7 per cent decrease in October. This marked the largest gain since March 2022 and suggested a strong performance for clothing sales over the holiday period. Year-over-year, November spending on apparel increased by 1.9 per cent, the first such increase in nine months.

The holiday shopping season aligned with predictions, with the National Retail Federation forecasting a 3-4 per cent increase in 2023 holiday sales, close to the longer-term growth range. Mastercard SpendingPulse data indicated a 3.1 per cent increase in consumer spending during November and December, though this figure is not adjusted for inflation. With the overall inflation rate also at 3.1 per cent, according to the Bureau of Labor Statistics Consumer Price Index, aggregate unit volumes of purchases remained flat.

Alternative inflation measurements used by the Federal Reserve, sourced and calculated differently from the headline Consumer Price Index, showed a month-over-month decrease of 0.1 per cent between October and November, the first monthly decrease since April 2020. Year-over-year, prices measured by the Bureau of Economic Analysis were 2.6 per cent higher in November, with core inflation at 3.2 per cent, both well below the peak rates of 2022.

With higher interest rates helping to bring inflation closer to the Federal Reserve's two per cent target for core inflation, and a strong labour market, there is growing optimism about a soft economic landing following the steep interest rate increases. Federal Reserve officials have hinted at the possibility of interest rate cuts in 2024 to support economic growth, which is expected to be modest, the update added.

The US labour market added approximately 216,000 new jobs in December, although revisions to previous months were negative. The unemployment rate remained steady at 3.7 per cent, a historically low level. Wages in December were up 4.1 per cent year-over-year, slightly higher than November's 4.0 per cent but continuing a downward trend from the 5.9 per cent peak in March 2022. Wage growth has consistently outpaced the overall consumer price index since May 2023.

Fibre2Fashion News Desk (KD)