The global textile industry is facing a perfect storm scenario as production costs continue to climb and demand declines, a new report by the International Textile Manufacturers Federation (ITMF) has found.

The 19^th edition of the ITMF Global Textile Industry Survey found that the global business situation in the textile industry has been negative since June 2022 and is still deteriorating.

Companies around the world and across all segments face a “perfect storm” scenario, it claims, with high production costs and relatively low demand. At the same time, companies’ expectation for the business climate in six months-time have been improving since November 2022. It is unclear if this growing optimism about the mid-term future is due to a belief that the situation cannot get much worse or anticipation for a well-founded economic normalisation.

Order intake has also steadily decreased since November 2021, mostly in line with the trend in the business situation, the report showed. The rate of decline has nevertheless slowed down in March 2023, likely due to weak demand.

“Weakening demand” has indeed been rated the major concern in the global textile value chain since July 2022 and its importance has even grown in the last survey. Inflation remains the second major concern worldwide.

The expected improvements for the second half of 2023 are supported by a relatively low level of order cancellations and stabilising inventory levels.

53% of respondents to the 19th GTIS recorded no order cancelations during the last four months (down from 58% last January). The phenomenon is stronger in South America and touches spinners and weavers relatively more.

58% of respondents also rated inventory levels as average. The number of companies reporting high inventory levels is greater in Asia and Europe. Among segments, it is the highest for home textile producers.

The ITMF released it’s 18^th GTIS in February, which revealed that high inflation and rising interest rates are the main current drivers of the global economy, but the core problem of the textile supply chain in 2023 are high inventories at the brand and retail level.

With the opening of economies around the world after the Covid crisis, consumers had the opportunity to spend the money they could not during 2020 and in the first half of 2021. Consequently, demand soared, and brands and retailers increased orders to meet this pent-up demand.

However, with inflation rising, especially after the Russian invasion of Ukraine in February 2022, demand for consumer goods has now slowed while inventories have remained very high.