Opportunities And Challenges in The Sewing Machinery Industry

The Sino-US economy is stabilizing and improving. In the first half of the year, China's GDP grew by 5.5% YoY. The July Political Bureau meeting emphasized "enhancing macro policy control" and "strengthening countercyclical adjustments and policy reserves." A series of policy documents were introduced, such as "Opinions on Promoting the Development and Growth of the Private Economy" and "Measures to Restore and Expand Consumption." These policies are expected to bolster economic rebound in the second half, potentially achieving the annual economic growth target. The US economy maintains resilience, with Q2 GDP growth of 2.4%, surpassing general expectations. Unemployment remains at historic lows, and consumer confidence has rebounded to near two-year highs. The monetary deposits released to residents during the pandemic remain close to $1 trillion, indicating short-term consumption potential. As interest rate hikes end and inflation recede, demand for imported clothing and footwear is expected to rebound swiftly.

The textile industry is poised for improvement. According to the International Textile Manufacturers Federation (ITMF) Global Textile Industry Survey (GTIS) conducted in the first half of July 2023, the average operational condition of the global textile industry has shown some improvement. While still challenging, more textile enterprises have adapted to adverse commercial environments. Orders from apparel, home textile, and industrial textile producers have significantly improved, with backlogs increasing in South America and industrial textiles. The survey indicates a gradual emergence from the trough for the global textile industry, showing positive signs of stabilization and recovery.

The clothing and footwear inventory remains to be digested. Due to factors like pandemic-driven fiscal stimuli in Europe and America, supply chain crises, and strained maritime resources, significant orders were placed by developed countries, leading to high inventories for clothing and footwear brands. Amidst tightening monetary policies and inflation, high inventories caused a sharp reduction in clothing and footwear orders in 2023, leading to a considerable drop in demand for sewing equipment. It is anticipated that the impact of high inventories on orders will persist until the end of the third or even fourth quarter. Statistical surveys indicate that after the first quarter, almost half of fashion stores in Europe and America still have excess inventory. In the first half of the year, clothing wholesalers had inventory-sales ratios more than 15% higher than the same period last year. Clothing imports to the US, EU, UK, and other regions dropped by an average of over 10% YoY.

Effects of interest rate hikes and inflation continue. Concerning interest rate hikes, the US is significantly slowing down, likely to cease hikes within the year. The market expects improvements. In Europe, the trend of continued interest rate hikes persists, as signs of economic recession emerge, and the impact of economic contraction caused by rate hikes is yet to be eliminated. Regarding inflation, although high inflation in Europe and America has substantially eased, core inflation rates remain elevated, leading to price increases and significant impacts on consumer durables like clothing and footwear. Statistics show that in the first half of the year, consumer expenditure on apparel and footwear in developed countries like Europe and America slowed by around 6 percentage points YoY. Retail sales of clothing and apparel stores decelerated by over 12 percentage points YoY, indicating insufficient consumer capacity.