Industry Employment Sags
Robert S. Reichard, Economics Editor
Putting a positive spin on all this, however, is the fact that not all of this worker drop-off can be attributed to declining industry activity. A good part, for example, can be traced to increasing productivity, which has enabled the industry to meet any given demand with fewer and fewer employees. And these productivity increases are expected to continue at near a 2.5-percent annual rate through the foreseeable future. More importantly, these impressive efficiency gains are probably one of the key reasons that the industry continues to survive and even show some profit in today's hotly competitive global marketplace.
An Improving Business Picture
US textile and apparel sectors should also be helped by the somewhat less dismal economic outlook anticipated for the next few quarters. To be sure, the nation is still deep in the biggest recession in more than 70 years. But there now seems to be some light at the end of the tunnel as consumers and businesses make substantial progress in trimming the imbalances that precipitated the downturn.
On the consumer front, sky-high family indebtedness is beginning to contract. Mortgage commitments, which account for three-fourths of all household borrowing, have been declining for three quarters in a row. Add in the fact that all the new Washington stimulus moves are starting to boost consumer confidence, and retail sales should show at least a modicum of improvement in the months immediately ahead.
On a business front, corporate cost-cutting and inventory retrenchment are pretty much nearing completion, thus paving the way for some increased activity.
Finally, there's Wall Street. True, the market is still quite volatile, but stock prices do seem finally to have bottomed out. Given all the above, economists are predicting decelerating gross domestic product losses, with the 6.3-percent tumble of late last year giving way to only a 2- to 3-percent drop over the current quarter. And there could even be some fractional gains toward year end. All this should slow down recent textile and apparel losses - though any outright gains in these industries would still seem to be a long way off.
Big import question marks are also keeping the industry on edge. To be sure, incoming shipments of textiles and apparel in early 2009 were down 14 percent. But this isn't nearly as encouraging as it might seem. The decline in US manufacturers' shipments of textiles and apparel over the same period were off 24 percent and 12 percent, respectively. Implication: The huge foreign share of our overall textile and apparel market isn't declining and may well be continuing to grow. And that is particularly pertinent for our biggest textile supplier - China. The Chinese situation will bear especially close watching because Washington seems to be easing its pressure on Beijing for a further upward revaluation of its currency, the yuan. The Treasury Department is now saying China is not manipulating the yuan to increase its exports. That's not to say US officials are happy about Beijing's current currency and subsidy policies that clearly continue to make Chinese products unrealistically cheap to US buyers. The problem is that our options are limited. It's far more important to keep China on our side, not only for crucial geopolitical reasons, but also because that nation's big economic stimulus program, along with our own, is clearly needed to put the world back on the road to prosperity.
Download Current US Textile And Economic Indicators.