Pay Attention To The Economic Environment Of Textile Industry Due To Repeated Epidemic Situation And Geographical Conflicts

Since the beginning of this year, due to repeated epidemic situation, long-term geopolitical conflicts, energy shortage, high inflation, and tight monetary policy, the global economic downturn has gradually become clear, the demand side pressure is more significant, and the risk of economic recession has increased significantly.

At the end of the third quarter, the global manufacturing industry contracted. In September, the J.P. Morgan Global Manufacturing Purchasing Manager Index (PMI) was 49.8, which was the first time since July 2020 to break through the boom and bust line. The new order index was only 47.7, and business confidence fell to a new low since 28 months;

The OECD consumer confidence index has remained at 96.5 since July, and has been in the contraction range for 14 consecutive months;

The barometer index of Global trade in goods remained at the 100 benchmark level in the third quarter. However, according to the Dutch Bureau of economic policy analysis (CPB), after excluding price factors, the global trade volume decreased by 0.9% month on month in July, and increased by only 0.7% in August.

Affected by liquidity tightening and economic downturn expectations, global commodity prices gradually fell after August, but the overall price level was still at a high level. In September, the IMF energy price index still increased by 55.1% year-on-year.

However, the inflation rate of all OECD member countries has not yet reached 10.7% after the inflation rate reached the peak of 10.7% in July, and the inflation rate of all OECD members still reached 10.7% after the inflation rate reached the peak of 10.7%.

Figure 1: trends of major global macroeconomic indicators

Data sources: IHS Markit, WTO, OECD, IMF

China's macro-economy withstood the impact of the epidemic and the complex and severe external environment and other factors beyond expectations, and made efforts to repair the losses. With the implementation of the national economic stabilization package and successive policies and measures, the momentum of macroeconomic recovery and development was better than that of the second quarter, especially the sustained recovery of production and domestic demand markets, showing good development toughness.

In the first three quarters, China's GDP increased by 3% year-on-year, 0.5% higher than that in the first half of the year; The total retail sales of consumer goods and the industrial added value of Enterprises above designated size increased by 0.7% and 3.9% respectively on a year-on-year basis, and the growth rates rose by 1.4% and 0.5% respectively compared with the first half of the year.

In the first three quarters, China's total exports (in US dollars) and fixed assets investment (excluding farmers) increased by 12.5% and 5.9% respectively year-on-year in the first three quarters, making positive contributions to stabilizing the macro-economy.

Although China's macro-economy shows a good momentum of recovery, the growth rate of industrial enterprises' profits has not yet turned positive, and the manufacturing industry is under pressure, and the recovery foundation still needs to be further stabilized.

Figure 2: year on year growth of China's GDP

Source: National Bureau of statistics

Figure 3: cumulative year-on-year growth rate of China's major macroeconomic indicators

Source: National Bureau of statistics, China Customs

In the first three quarters, the pressure on both sides of supply and demand of textile industry was superimposed, and the growth rate of main operating indicators slowed down. After entering the sales peak season in September, the market orders have increased and the startup rate of some links in the industrial chain has improved. However, the overall operation situation of the industry has not shown obvious signs of bottoming up. Efforts to improve and show development toughness, and effectively prevent and resolve various risks and challenges are still the core concerns of the industry.

(source: China Textile Industry Economic Research Institute)