Global Textile Industry Cautious, Despite Optimistic Long-Term Outlook

The global textile industry is facing a number of challenges, including rising costs, weak demand, and supply chain disruptions, according to the ITMF's Global Textile Industry Survey (GTIS) conducted in mid-September 2023.

The indicator for the business situation stood at -27 percentage points (pp), as companies in the entire textile value chain were struggling with the aforementioned challenges. Business expectations have remained unchanged since July at around +20 pp, suggesting that participants are optimistic about the long-term prospects of the industry.

While order intake recovered in May 2023, it flattened in July and remained very weak in September (-28 pp). The entire textile value chain is running on minimum levels of orders, and as long as brands and retailers do not increase orders, the entire value chain will continue struggling.

Order backlog slightly increased globally, from 1.9 months in July to 2.2 months in September 2023. However, this indicator has been on a falling trend since the end of 2021. The average capacity utilization rate dropped again globally (69%), and textile manufacturers expect this rate to remain low in six months' time as well.

Weakening demand has been the major concern in the global textile value chain for a year, and this concern grew even stronger in September 2023 due to high inflation rates fueled by high energy and high raw material prices. Nevertheless, participants seem not to be concerned by order cancelations, and inventory levels remain average along the textile value chain.

Overall, the GTIS survey findings suggest that the global textile industry is facing a number of challenges in the short term, but participants are optimistic about the long-term prospects of the industry.

Analysis:

The GTIS survey findings are concerning, but it is important to note that participants are still optimistic about the long-term prospects of the industry. This suggests that the current challenges are seen as temporary and that the industry is expected to rebound in the future.

The main drivers of the current challenges are rising costs, weak demand, and supply chain disruptions. Rising costs are being driven by factors such as high energy prices, high raw material prices, and rising labor costs. Weak demand is being driven by factors such as the war in Ukraine, high inflation, and a slowdown in the global economy. Supply chain disruptions are being driven by factors such as the war in Ukraine, COVID-19 lockdowns, and port congestion.

The textile industry is a global industry, and the challenges facing the industry are also global in nature. This means that it will be difficult for any individual country or company to address these challenges alone. It will be important for the industry to work together to find solutions to these challenges.

In Summary:

The global textile industry is facing a number of challenges in the short term, but participants are optimistic about the long-term prospects of the industry. The main drivers of the current challenges are rising costs, weak demand, and supply chain disruptions. It will be important for the industry to work together to find solutions to these challenges.