Economic Observation: The Global Economic Recession Still Shows No Signs Of Easing

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Domestic consumption is affected by multiple adverse factors, and the purchasing power of end consumers is insufficient. According to the data of the National Bureau of Statistics, the retail sales of clothing products in China in October 2022 will be 83.86 billion yuan, down 9.2% year on year; From January to October, the accumulated retail sales of clothing products were 739.12 billion yuan, a year-on-year decrease of 5.5%.

At the same time, the domestic "Double 11" war report is poor. In this year's "Double 11", the expectation of consumption recovery is also extremely weak. From October 31 to November 11, the cumulative sales of the whole network of "Double 11" was 1115.4 billion yuan, which was 150.28 billion yuan more than 965.12 billion yuan in the same period of 2021, with a growth rate of 15.57%, but there was a large gap with the growth level over the years. Among them, the sales volume of clothing category was 138.9 billion yuan, up 13.9% year on year, lower than the growth rate of the total amount.

Overseas consumption is insufficient and export orders are sluggish. The global economic recession still shows no signs of easing, the economic situation is poor, and the overseas consumer market is insufficient. The OECD predicts that the current energy crisis, the worst since the 1970s, will hit the global economy hard, and the global economic growth will slow down from 3.1% this year to 2.2% in 2023.

Superimposed by the Xinjiang cotton incident, export orders continued to decline. According to customs statistics, in October 2022, China's textile and clothing exports will reach US $25.024 billion, down 13.53% year on year and 10.79% month on month; From September to October in the peak season of traditional consumption, the cumulative export of textiles and clothing reached US $53.075 billion, down 8.60% year on year.

In the third quarter of 2022, the growth of clothing imports in the United States slowed down significantly, the import price rose in the same period, and the import volume still maintained a double-digit growth. According to the statistics of the US Department of Commerce, the US clothing imports in the third quarter of this year only increased by 5.4% year on year, but the import volume increased by 26.2% year on year. The slowdown in the growth of imports is mainly due to the 2.1% year-on-year decline in the growth of imports to China, while the growth of imports to China in the first and second quarters of this year reached 25.6% and 19% respectively. In the third quarter of this year, the growth rate of clothing imports from the United States to Vietnam, India, Indonesia, Bangladesh and Cambodia was 30-45%, and American buyers continued to shift from China to other regions. In the first half of this year, the epidemic led to the decline of clothing imports from the United States to China, while the ban on Xinjiang cotton accelerated the decoupling of buyers from China. In the third quarter of this year, the United States' imports from Mexico and Central American countries also suffered a similar decline, because the unit price of clothing in Latin American countries rose. Compared with that before the epidemic, the clothing imports and imports from the United States to China in the third quarter of this year decreased by 9% and 15% respectively, while the imports and imports from Bangladesh increased by 56% and 71% respectively. Although the proportion of China in American clothing imports has declined, China is still the largest source of American clothing imports.

Nearly 80% of American cotton has been harvested. As of November 20, 2022, the harvest progress of American cotton is 79%, which is 7 percentage points higher than the average of the same period in recent five years. India's new cotton is slightly slow to come into the market. According to AGM data, as of November 13, 2022, the market volume of Indian cotton in 2022 will be 495000 tons, 437000 tons less than the three annual average. In the textile market, after the Diwali Festival, at least 75 factories were closed in Narol, India, and the operating rate of enterprises maintaining production was about 30%. According to the latest survey of the American market research company, the sales of American clothing in the fourth quarter will decline slightly. According to the Echo, the French clothing industry is experiencing the worst crisis in 15 years. In the short term, overseas holiday clothing sales were lower than expected, and the recent fall of the US dollar slightly supported the bottom of the price. However, due to the continued decline of terminal consumption, international cotton prices are expected to remain low. The textile market is struggling, and the domestic cotton price is expected to be weak and volatile.