The US Department of Commerce said in October that the US economy remained strong with an increase in real gross domestic product (GDP) and a rise in wages and consumer spending.
Earlier in September, S&P Global Ratings had predicted a 2.7 per cent expansion in US economy in 2024, and 1.8 per cent in 2025 on an annual average basis. These forecasts were 0.2 and 0.1 percentage point higher respectively, compared with the rating agency’s June forecasts. Agency forecasts Q4, FY25 growth at 2 per cent, down from 3.1 per cent in same quarter last fiscal. Additionally, the agency expected softening of real income growth, and observed the signs of slowdown in discretionary consumption. It saw inflation to stay slow in the coming months, and industrial production to remain flat quarter-on-quarter. It further estimated, at around 25 per cent, the probability of a recession starting within the next 12 months. In 2024, US businesses continued to face higher costs of capital and policy uncertainty, which limited capital expenditure and hiring.
Employment overview
The unemployment rate is likely to rise in the next several quarters to 4.5 per cent by the end of 2025, from the current 4.2 per cent, forecasts S&P Global in the same report. Analysing the employment situation in the country, S&P Global observed that the expansion of the labour force, rather than a fall in employment, caused a rise in the unemployment rate. This marked the key difference from the previous cycles at the start of recession.
According to the Bureau of Labour Statistics (BLS), the US economy added 254,000 jobs in the month of September. With the rate of unemployment at 4.1 per cent – the lowest average unemployment in 50 years, the number of unemployed stood at 6.8 million. The Department of Commerce found these figures exceeding the expectations. It is reported that 16 million jobs were created under the outgoing government. The Department further said that over 700,000 new manufacturing jobs were created and over $910 billion in private manufacturing investments were announced nationwide in the industries of the future. Wages also continued to rise. The latest BLS estimates showed real average hourly earnings for all workers increased 0.2 per cent month-on-month and 1.3 per cent year-on-year in August. In September, the labour force participation rate was 62.7 per cent for the third consecutive month, and the employment-population ratio changed little at 60.2 per cent. The number of 5.7 million people, those not in the labour force but wanted a job, too changed little in September.
Half-yearly trade
On a half-yearly basis, between January and June 2024, the US imports of textiles and apparel declined 3.58 per cent to $49.349 billion from $51.178 billion during the same period of last calendar year. Apparel constitutes the bulk of the US textile imports, and it fell by 6.04 per cent to $35.748 billion from $38.044 billion last year, while non-apparel imports rose 3.55 per cent to $13.134 billion. Man-made fibre products dominated the imports at $25.235 billion, followed by cotton products at $20.697 billion, silk and vegetable fibre products at $1.889 billion, and wool products at $1.527 billion, according to the Office of Textiles and Apparel (OTEXA).
China continued to stay as the largest supplier with 24.26 per cent market share, followed by Vietnam with 14.78 per cent share. Among the top ten suppliers, only Cambodia showed an increase in apparel imports, growing 4.45 per cent to $1.52 billion. Meanwhile, imports from Mexico, Bangladesh, Indonesia, China and India fell by 11.24 per cent, 10.97 per cent, 9.75 per cent, 6.37 per cent and 2.64 per cent respectively.
During the same period, the exports of textiles and apparel from the US dropped 3.17 per cent to $11.5 billion. Mexico and Canada were the top export destinations, buying $6.1 billion and $4.2 billion worth of merchandise from the US respectively. At the same time, the inflation-impacted EU registered an 11.2 per cent drop in apparel consumption during the reported period, resulting in $1.2 billion in orders. The other significant export destinations were Honduras, China, the Dominican Republic, the UK, and Japan. Freight prices impacted the trade levels. With reduced water levels in the Panama Canal, the cost and duration of transit between Asia and the American East Coast increased, while security worries surrounding the Suez Canal raised container rates.
Upland cotton export
As of October 3, 2024, the net sales of Upland (short and medium staples) cotton in the US, for 2024-25 season, had totalled to 95,800 RB (Running Bales) with each bale weighing 226.8 kg or 500 pounds. Exports of Upland cotton during the period totalled to 107,100 RB, with Pakistan (26,800 RB), Mexico (15,000 RB), Vietnam (11,300 RB), China (9,700 RB), and Honduras (8,200 RB) emerging as the primary destinations. According to the USDA’s export sales report for the week ending September 26, significant increases in Upland cotton sales were observed, particularly for Vietnam (29,100 RB, including a decrease of 6,900 RB), Pakistan (25,400 RB, including a decrease of 600 RB), Peru (14,000 RB), Guatemala (11,300 RB, including a decrease of 100 RB), and China (8,500 RB). However, the gains achieved in these territories were offset by reductions in sales to Malaysia (17,600 RB) and Japan (100 RB). Additionally, net sales of 39,600 RB for the 2025-26 season were destined for Malaysia.
As of the Pima cotton, the net sales amounted to 9,500 RB for the same season, for which increases were mainly noted for India (6,200 RB, including a decrease of 1,700 RB), Peru (1,000 RB), Djibouti (900 RB), Türkiye (500 RB), and Thailand (400 RB). Exports of Pima cotton reached 6,500 RB that included major destinations of India (4,500 RB), Bangladesh (800 RB), Pakistan (400 RB), Egypt (400 RB), and Japan (100 RB though with reduced sales).
Election outcome
The US had elections in 2024 and voted for electing a new President, results of which were expected to have impact on the US textile industry, with both contesting candidates holding similar trade policies that also include potential bans on Chinese imports. With Republican party coming to power, the trade policies and protectionism was expected to disrupt supply chains and increase costs, while a win for Democrats would mean more focus on higher corporate taxes that may raise production expenses. The US textile sector is reliant on imports hence needs trade agreements to sustain growth. At the time of this feature going into press, the Republican candidate was elected to be the next US President, who is scheduled to take oath on January 20, 2025.
Port strike
In October, the US East Coast and Gulf Coast port operators faced a 3-day strike by the dockworkers, resulting in a cargo backlog. The strike ended with the US Maritime Alliance and the International Longshoremen’s Association reaching a tentative agreement on wages. The master contract was also extended till January 15, 2025. The negotiation on all other outstanding issues was to follow this truce. The development arrested further rise of freight charges at right time. Average spot rates on the most affected trade route from North Europe to US East Coast had reached $2,900 per FEU (40 ft equivalent unit) on October 4, increasing 58 per cent since the end of August. The alternative trade route from North Europe to the US West Coast was also hit, where the average spot rates increased 48 per cent in the same period to reach $4,450 per FEU. However, the re-establishment of normal flow of goods was to take another 2- to 3-week time. As of October 4, there were 44 ships lined up and more than 120 on-route, to enter the affected ports. This was expected to impact schedules towards the end of 2024, and possibly into 2025 as well, in the run-up to Lunar New Year at the end of January which traditionally sees an increase in goods shipped out of the Far East.
Senate Bill 707
California’s Responsible Textile Recovery Act of 2024 (Senate Bill or SB 707) was signed into a law by the US State’s Governor. The legislation established the country’s first EPR (Extended Producer Responsibility) textile recycling programme, and marked a significant step forward in the state’s efforts to combat waste and promote sustainability. SB 707 mandates a framework for producers and other participants in the value chain to take responsibility for the entire lifecycle of their products and textiles, including repair, recycling and reuse of garments and fibres. When implemented, it will not only reduce the amount of textiles sent to landfills, but also support the development of upcycling and recycling across California. It will additionally help address the environmental impacts of fast fashion and the throwaway culture which such a fashion has given birth to. It will also incentivise producers to adopt less wasteful production and greener designs.
Grower enrolment increased
The US textile industry reflected its growing commitment to sustainable practices when the US Cotton Trust Protocol achieved a remarkable 35 per cent increase in grower enrolment for the 2024 crop year. The Trust Protocol currently has 2.1 million acres of cotton under sustainable cultivation, which it aims to increase further. The Trust has plans to achieve this increase in its footprint mainly through the Climate Smart Cotton Program which targets the inclusion of historically underserved communities.
Key event
A semi-annual exhibition was held at the Javits Center in New York City in the month of July. The event was organised jointly by the Sub-Council of Textile Industry, China Council for the Promotion of International Trade (CCPIT), and Messe Frankfurt North America, in which more than 500 Chinese companies displayed their latest innovations and sustainability efforts. Of this, 137 companies had environmentally friendly certifications. All the Chinese supplies during the event had innovations and sustainability, a clear departure from the ‘stigma’ that is generally associated with Chinese products being of lower quality or the cheap fashion. The Chinese products have shown a change over the years as they get better and better from a quality perspective.
The US economy showed strong growth, with GDP rising and wages and consumer spending increasing.
However, S&P Global forecasts slower growth and a higher unemployment rate by 2025.
Textile imports decreased, while exports dropped 3.17 per cent.
The US also faces challenges like a port strike, the new Senate Bill on textile recycling, and a focus on sustainable practices in cotton farming.
Fibre2Fashion News Desk (SB – WE)
