Retail prices for garments in the US have been increasing more slowly than the overall inflation rate, according to the latest report by Cotton Incorporated (Cotton Inc). Relative to averages in 2019 (pre-COVID), the CPI for apparel was 2.2 per cent higher in August, while the overall CPI was 15.8 per cent higher.

On the other hand, import costs have been rising. The latest seasonally adjusted value per square metre equivalent (SME) of cotton-dominant apparel was $4.04/SME. This is the highest cost on record (data since 1989), as per Cotton Incorporated’s Executive Cotton Update - US Macroeconomic Indicators & the Cotton Supply Chain for October 2022.

The posting of a record high represents a sharp reversal relative to import costs during the pandemic that nearly set record lows. Seasonally adjusted import costs for cotton-dominant apparel were below $3/SME in late 2020 and early 2021. Imports during these months likely included deliveries resulting from contracts signed during the most challenging months of the pandemic 8-10 months earlier.

In August, overall consumer spending in the US increased marginally (0.1 per cent) month-over-month. Year-over-year, overall spending was 1.8 per cent higher. Consumer spending on garments was 0.4 per cent lower both month-over-month and year-over-year in August. Every month between June 2020 and February 2022, the growth rate in consumer spending on apparel exceeded the growth rate in overall spending. In every month since March 2022, the overall rate has been higher than the rate of spending on apparel.

The International Monetary Fund (IMF) will release an updated set of estimates for global economic growth in the first half of October. The current IMF figures (released July 2022) already suggest that countries accounting for one-third of the world economy will contract in consecutive quarters either in 2022 or 2023. Inflation is a global issue. The rise in European energy prices, a slowdown in the Chinese property market, and climbing interest rates in the US were cited as additional sources of concern in preliminary remarks by the IMF’s director ahead of October’s release. While reiterating the risk of downside revision, the IMF official expects a loss in global output around $4 trillion between now and 2026 (for context, $4 trillion is about the size of Germany’s economy, the world’s fourth largest market).

Another major development in the global economy has been a steep increase in the value of the US dollar. As US interest rates increased relative to those in other markets over the past several months, it made investment in dollar-denominated assets more attractive, and the resulting influx of money caused the dollar to strengthen. For emerging markets, this can have several adverse effects. Emerging market debt is often expressed in dollar terms. When the dollar becomes stronger relative to the currency of a country with debt, payments become more expensive in domestic terms. This exchange rate issue is compounded by the rise in interest rates, which can directly impact debt payments. Emerging markets have been an engine of global economic growth in recent decades but mounting financial pressures may push some countries toward default, the report said.

The US economy was estimated to have added 263,000 jobs in September. The existing figure for July increased 11,000 positions to 537,000. The existing figure for August was unchanged at 315,000. The twelve-month average for job gains is 474,000. The unemployment rate decreased from 3.7 per cent to 3.5 per cent. Since the end of 2021, the unemployment rate has been below four per cent.

Compared to early months of the pandemic, the labour force participation rate has increased by one percentage point (from 61.4 per cent in the summer of 2020 to 62.4 per cent most recently). Since June 2020, the rate of wage growth has generally been between 5 per cent and 5.5 per cent. The latest value (September) was 5 per cent.

By Fibre2Fashion 
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