According to China Customs statistics, from January to July this year, China's clothing exports (including clothing accessories, the same below) totaled US$909.4 billion, down 8.8% year-on-year. July's exports were US$15.96 billion, down 18.7% year-on-year, and the decline widened by another 2.4 percentage points compared to the previous month. Since May, after the backlog of orders was shipped, China's clothing exports have continued to decline, with the decline widening month by month. Under the multiple pressures of geopolitical conflicts, slowing global demand, and adjustments in procurement trends, China's clothing export industry has still shown strong resilience, with significant growth compared to the same period before the epidemic, and a 14.2% increase compared to exports from January to July 2019.
The global economy still faces multiple downside risks
The slowdown in the growth of developed economies continues to be the main reason for the slowdown in global economic growth. The International Monetary Fund (IMF) expects that the economic growth rate of developed economies will fall from 2.7% in 2022 to 1.5% in 2023, and about 93% of developed economies will see a slowdown in economic growth in 2023. In 2024, the growth rate of developed economies is expected to further fall to 1.4%. In contrast, the economic growth prospects of emerging market and developing economies are basically stable in 2023 and 2024, with expected economic growth rates of 4.0% and 4.1% respectively. However, there are significant differences between regions.
The US economy exceeded expectations, with inflation and inventories declining
In the second quarter of this year, the US economy achieved unexpectedly high growth of 2.4%, maintaining a growth rate of over 2% for three consecutive quarters. In June, retail sales of clothing and apparel stores reached US$25.96 billion, up 1% from the previous month and up 2.2% year-on-year, marking the first year-on-year increase since March this year, highlighting the resilience of consumer spending in the US market. The US clothing and apparel store inventory-to-sales ratio was 2.39, down 0.4% from the previous month, and inflation expectations have fallen. Walmart said that inventories were down 5% year-on-year by the end of the second quarter. Target's second-quarter inventory decreased by 17%. Home Depot reported that it expects inventories to decrease by 11% year-on-year for the full year.
Data from US research firm Descartes Datamyne shows that the volume of seaborne container shipping from Asia to the US in July decreased by 13% year-on-year. The rate of decline narrowed compared to the 20% in April and May. There are signs of improvement in the flow of clothing goods, with July's volume down 23% year-on-year, showing a continuous improvement trend compared to the 42% decrease in February.
Eurozone economic growth rebounded, inflation slowed
According to data from Eurostat, the Eurozone inflation rate slowed to 5.3% in July due to falling energy prices. Germany's CPI remained high, with a year-on-year increase of 6.2%; Eurozone economic growth rebounded in the second quarter of 2023, reaching a growth rate of 0.3%. The latest data from Eurostat shows that EU retail sales fell by 1.4% year-on-year and 0.3% month-on-month in June. Retail sales of non-food products excluding automotive fuels fell by 0.2% month-on-month in June and remained stable year-on-year, ending four months of continuous decline.
Japanese retail sales have not yet recovered to pre-pandemic levels
Japan's real household consumption expenditure fell by 4.2% year-on-year in June, marking a year-on-year decline for four consecutive months. According to adjusted data from the Japanese Ministry of Economy, Trade and Industry, Japan's retail sales increased by 5.9% year-on-year in June and decreased by 0.4% month-on-month. During the period, the year-on-year increase in retail sales by large retailers increased to 4.1%. From January to June, Japan's textile and clothing retail sales totaled 4.2 trillion yen, up 0.6% year-on-year but down 22.8% compared to the same period before the epidemic. In June alone, Japan's textile and clothing retail sales were 694 billion yen, down 2% year-on-year and down 25.6% compared to the same period before the epidemic.
Currently, major developed economies are experiencing weak economic recovery, inflation remains high, geopolitical conflicts persist, and there is insufficient short-term momentum for external demand to recover, putting significant pressure on clothing exports. However, it is also important to see that China's economy is resilient, and its fundamental long-term positive trends remain unchanged. With a series of steady foreign trade policy measures continuing to exert their effects, clothing exports are accumulating new vitality. First, overseas market inventories are bottoming out and stabilizing, and replenishment demand is rising, and the throughput of goods and containers at ports across the country is increasing. Second, recent exchange rate movements help enhance the price competitiveness of Chinese clothing. Third, the decline in the export base in the second half of last year helps stabilize this year's year-on-year figures, alleviating the pressure of declining clothing exports. Considering the above factors, we believe that it is feasible to achieve stable and high-quality growth in clothing exports in the second half of this year.
