WASHINGTON — December 3, 2019 — The National Retail Federation today issued the following statement from Senior Vice President for Government Relations David French in response to President Trump’s comments that he might wait until after the 2020 elections to reach a trade agreement with China:

“We want and need to see a deal as soon as possible. The tariffs continue to hurt U.S. businesses, workers and consumers and are a substantial drag on the U.S. economy. Waiting another year to resolve the cost and uncertainty of the trade war is a bad deal not just for retailers and their customers but every segment of the economy from farmers who export their crops to small manufacturers who rely on imported parts and materials. We agree that we need to restate our relationship with China on a number of levels but we need to bring resolution to this issue rather than delay it.”

Posted December 3, 2019

Source: The National Retail Federation (NRF)

HONG KONG — December 2, 2019 — China is now the world’s biggest textile exporter and market, with advanced manufacturing and additional investments placed by Chinese companies around the world. This is a major driving force behind Intertextile Shanghai Apparel Fabrics, making the fair a key platform for exchanging first-hand industry updates as well as business. The 25th Autumn Edition held a private round table meeting on September 25, 2019, which included a keynote speech and a panel discussion. Representatives of high-ranking international associations discussed the topic “Sustainability and International Capacity Cooperation in the Textile Industry”.

“At each fair we aim to curate a fringe programme that will inform, engage and connect thought leaders from around the world,” said Olaf Schmidt, vice president of Textiles & Technologies at Messe Frankfurt, who opened the meeting with a welcome speech.

Xu Yingxin, vice president of the China National Textile and Apparel Council and Chairman of CCPIT-TEX (co-organizer of the fair) delivered the keynote, titled “The Current Situation of China’s Textile Industry”. Here are the main takeaways from the keynote and the panel discussion that followed.

The world’s biggest chemical fiber producer

After decades of reform, China’s textile industry has become a key player on a global scale, being one of the country’s first markets to open up. In 2018, China’s chemical fiber production exceeded 50 million tons, making up over two thirds of global production. Textile exports from China reached 37.6% of the world’s total in 2018, a 3.5% increase from the previous year, while apparel exports accounted for 31.3% of the world’s total.

Strong support from home

Although purchasing power has slowed slightly, as more Chinese consumers become wary of over-spending, the textile industry in China still experienced high demand from its domestic market. Due to the population size, the industry also has a safety net in terms of clothing being a basic necessity. Domestic retail sales of apparel grew by 8% in 2018, and have continued to grow in 2019, although not as quickly as previous years.

Part of the panel discussion focused heavily on the importance of maintaining a strong consumer economy in order to maintain strong domestic purchasing power. This is a concern seen around the world. Paul Alger (UK Fashion & Textile Association), warned of the social consequences and lack of purchasing power that come as a result of a weak consumer economy, as recently seen in the UK. Similarly, Rosette Carrillo (Confederation of Wearable Exporters of the Philippines) noted that the Philippines had much to learn from China’s domestic market growth. Meanwhile, K.V. Srinivasan (TEXPROCIL) indicated that India’s consumer economy benefits from their strengths, including a rich textile heritage and skilled technical workforce.

China’s next steps

Investments in the textile industry have also slowed as U.S.-China trade war frictions knocked confidence. However, there is still growth. China’s textile industry’s investments in fixed assets grew by 5% in 2018, before slowing in the first half of 2019. Investments have focused on technology and innovation, resulting in increased productivity.

With its position at the forefront of the world’s textile industry, China is now entering a new era of textile manufacturing and design. Three key missions were noted for China’s plan moving forward: technology and innovation; culture and local talent; and sustainability.

Sustainability was a key point during the panel discussion. Carol Hanlon (Textile Clothing Footwear Resource Centre, Australia) pointed out China’s capacity, as a leader of textile production, to drive change in circularity. Both Hanlon and Alger acknowledged the demand for sustainability in the future consumer: younger generations who are increasingly associated with climate activism.

Overseas trade and investments: the latest figures

The Belt & Road initiative was first proposed in 2013, and in 2014 became one of three major national development strategies in China. As of July 2019, the Chinese government has signed co-operation agreements with 136 countries along the route, which runs through three continents. During the initiative’s first five years, the total trade volume between China and countries along the Belt & Road route has exceeded USD 6 trillion, accounting for nearly a third of China’s total trade in goods during this period.

The textile industry deals with a large part of this trade. By 2018, the Chinese textile industry is reported to have invested $6.5 billion in countries along the Belt & Road route. China’s textile industry has steadily placed more investments further overseas, upstream and downstream.

These investments, both domestic and overseas, have two main directions. First, to create a worldwide production capacity, by building efficient manufacturing bases in China, Africa and countries along the Belt & Road route. And second, to develop international co-operation to strengthen resources throughout the supply chain (raw materials, design, R&D and even marketing). Between 2015 and 2018, Vietnam received the highest investment volume by far, followed by Ethiopia, Myanmar, Egypt, Cambodia, Malaysia, Pakistan and Tajikistan.

Has the US-China trade war opened up other markets?

An estimated 18% of China’s textile exports go to the United States, making this China’s largest export market for textiles, valued at around $50 billion. This also makes China the largest exporter of textiles and apparel to the United States, accounting for 38% of the nation’s total imports.

With ongoing tensions, tariffs and uncertainties, this has opened up opportunities for other countries to step in. Ade Sudrajat (Indonesian Textile Association) noted that Indonesia has experienced a decrease in purchasing power, and views the trade war as an opportunity — as seen in Vietnam, whose exports to the United States more than doubled in 2018. Indonesia is reportedly open to Chinese investment, seeking to develop local e-commerce and start-ups, and recognising a need for efficiency and marketing.

Similarly, Yuttana Silpsarnvitch (The National Federation of Thai Textile Industries) sees an opportunity for Thailand amidst trade frictions. He pointed out Thailand’s agricultural strengths, including traditional Thai silk as well as unique products such as pineapple yarns and banana yarns.

Panel discussion speakers

Zhao Hong, editor-in-chief of China Textile Magazine, moderated the panel discussion. The full list of speakers included:

•  Carol Hanlon, CEO, Textile Clothing Footwear Resource Centre (Australia);
•  Kelvin Cheuk, Vice Chairman, Hong Kong Institution of Textiles and Apparel;
•  K V Srinivasan, Chairman, The Cotton Textiles Expert Promotion Council (India);
•  Ade Sudrajat, Chairman, Indonesian Textile Association;
•  Xaybandith Rasphone, President of the Association of the Laos Garment Industry;
•  Seow Hon Cheong, Chairman, Malaysian Textile Manufacturer Association;
•  Rosette Carrillo, Associate Director, Confederation of Wearable Exporters of the Philippines;
•  Yuttana Silpsarnvitch and Mr Jumnong Nawasmittawong, President and Vice President respectively, The National Federation of Thai Textile Industries; and
•  Paul Alger MBE, International Business Director, UK Fashion & Textile Association.

Intertextile Shanghai Apparel Fabrics – Autumn Edition 2019 was co-organized by Messe Frankfurt (HK) Ltd; the Sub-Council of Textile Industry, CCPIT; and the China Textile Information Centre.

Posted December 2, 2019

Source: Messe Frankfurt (HK) Ltd

TEMPE, Ariz. — December 2, 2019 — Economic activity in the manufacturing sector contracted in November, and the overall economy grew for the 127th consecutive month, say the nation’s supply executives in the latest Manufacturing ISM® Report On Business®.

The report was issued today by Timothy R. Fiore, CPSM, C.P.M., Chair of the Institute for Supply Management® (ISM®) Manufacturing Business Survey Committee: “The November PMI® registered 48.1 percent, a decrease of 0.2 percentage point from the October reading of 48.3 percent. The New Orders Index registered 47.2 percent, a decrease of 1.9 percentage points from the October reading of 49.1 percent. The Production Index registered 49.1 percent, up 2.9 percentage points compared to the October reading of 46.2 percent. The Backlog of Orders Index registered 43 percent, down 1.1 percentage points compared to the October reading of 44.1 percent. The Employment Index registered 46.6 percent, a 1.1-percentage point decrease from the October reading of 47.7 percent. The Supplier Deliveries Index registered 52 percent, a 2.5-percentage point increase from the October reading of 49.5 percent. The Inventories Index registered 45.5 percent, a decrease of 3.4 percentage points from the October reading of 48.9 percent. The Prices Index registered 46.7 percent, a 1.2-percentage point increase from the October reading of 45.5 percent. The New Export Orders Index registered 47.9 percent, a 2.5-percentage point decrease from the October reading of 50.4 percent. The Imports Index registered 48.3 percent, a 3-percentage point increase from the October reading of 45.3 percent.

“Comments from the panel were consistent with the previous month, with sentiment improving compared to October. November was the fourth consecutive month of PMI® contraction, at a faster rate compared to the prior month. Demand contracted, with the New Orders Index contracting faster, the Customers’ Inventories Index remaining at ‘too low’ levels and the Backlog of Orders Index contracting for the seventh straight month (and at a faster rate). The New Export Orders Index returned to contraction territory, likely contributing to the faster contraction of the New Orders Index. Consumption (measured by the Production and Employment indexes) contracted, due primarily to lack of demand, but contributed positively (a combined 1.8-percentage point increase) to the PMI® calculation. Inputs — expressed as supplier deliveries, inventories and imports — were again lower in November, due primarily to contraction in inventories that was partially offset by supplier deliveries returning to ‘slowing.’ This resulted in a combined 0.9-percentage point decrease in the Supplier Deliveries and Inventories indexes. Imports contraction softened. Overall, inputs indicate (1) supply chains are meeting demand and (2) companies are less confident that materials received will be consumed in a reasonable time period. Prices decreased for the sixth consecutive month, at a slower rate.”

“Global trade remains the most significant cross-industry issue. Among the six big industry sectors, Food, Beverage & Tobacco Products remains the strongest, while Fabricated Metal Products is the weakest. Overall, sentiment this month is neutral regarding near-term growth,” says Fiore.

Of the 18 manufacturing industries, five reported growth in November: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Paper Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The 13 industries reporting contraction in November — listed in order — are: Wood Products; Printing & Related Support Activities; Furniture & Related Products; Textile Mills; Fabricated Metal Products; Transportation Equipment; Primary Metals; Plastics & Rubber Products; Petroleum & Coal Products; Nonmetallic Mineral Products; Machinery; Chemical Products; and Electrical Equipment, Appliances & Components.

WHAT RESPONDENTS ARE SAYING

“Business level is similar to October.” (Computer & Electronic Products)

“Chemical industry has been slow globally, but the curve seems to be flattening.” (Chemical Products)

“Economic uncertainty continues. Our outlook on future business is cautious, yet positive.” (Transportation Equipment)

“Economy is holding up. Business is staying constant. The same challenges persist — foreign exchange, trade uncertainty and trend changes [for example, sugar reduction].” (Food, Beverage & Tobacco Products)

“Slowdown in business has us revising our 2020-21 capital spend.” (Petroleum & Coal Products)

“The order book continues to shrink below our forecast levels. We’re unsure at this point how much of the slowdown is tied to certain events [like the General Motors strike], year-end inventory reductions by customers, or a worsening economy. We don’t expect clarity on this until early 2020, when we expect to either see restocking orders [a good sign] or not [a bad sign].” (Fabricated Metal Products)

“Demand has stabilized for the last half of [the fourth quarter], and production will be stable for the rest of this year.” (Machinery)

“Heading into the holiday season, we are seeing the backlog decrease as new orders for 2020 seem lighter than in past years.” (Plastics & Rubber Products)

“Markets have downshifted further. The continued confusion surrounding China trade has kept export markets on edge. Profits are elusive. Cash-flow planning is paramount. The general economy is slowing down.” (Wood Products)

“Incoming orders and production have ticked back up. Tariffs are still a question.” (Furniture & Related Products)

Manufacturing ISM® Report On Business® data is seasonally adjusted for the New Orders, Production, Employment and Supplier Deliveries Indexes.

*Number of months moving in current direction.

COMMODITIES REPORTED UP/DOWN IN PRICE AND IN SHORT SUPPLY

Commodities Up in Price
Steel — Hot Rolled*; and Steel — Stainless (2).

Commodities Down in Price
Aluminum (8); Base Oils; Caustic Soda (2); Freight (2); Polypropylene; Steel (5); Steel — Hot Rolled* (4); Steel — Scrap (2); and Steel Products (11).

Commodities in Short Supply
Electrical Components (2).

Note: The number of consecutive months the commodity is listed is indicated after each item. 
*Indicates both up and down in price.

NOVEMBER 2019 MANUFACTURING INDEX SUMMARIES

PMI®
Manufacturing contracted in November, as the PMI® registered 48.1 percent, a decrease of 0.2 percentage point from the October reading of 48.3 percent. “The PMI® contracted for the fourth straight month, at faster levels compared to October. This marks eight straight months of softening or contraction in manufacturing. All but one (Supplier Deliveries) of the PMI® subindexes registered at levels associated with contraction. For the third straight month, two of the six big industries expanded, and four contracted,” says Fiore. A reading above 50 percent indicates that the manufacturing economy is generally expanding; below 50 percent indicates that it is generally contracting.

A PMI® above 42.9 percent, over a period of time, generally indicates an expansion of the overall economy. Therefore, the November PMI® indicates growth for the 127th consecutive month in the overall economy, and the fourth month of contraction following 35 straight months of growth in the manufacturing sector. “The past relationship between the PMI® and the overall economy indicates that the PMI® for November (48.1 percent) corresponds to a 1.5-percent increase in real gross domestic product (GDP) on an annualized basis,” says Fiore.

THE LAST 12 MONTHS

New Orders

ISM®’s New Orders Index registered 47.2 percent in November, a decrease of 1.9 percentage points when compared to the 49.1 percent reported for October. This indicates that new orders contracted for the fourth straight month, and at a faster rate. “Of the top six industry sectors, Transportation Equipment again had the biggest drag on the New Orders Index in November. Only one of the top six industry sectors expanded and five contracted, declining from October performance,” says Fiore. A New Orders Index above 52.5 percent, over time, is generally consistent with an increase in the Census Bureau’s series on manufacturing orders (in constant 2000 dollars).

Of the 18 manufacturing industries, five reported growth in new orders in November: Apparel, Leather & Allied Products; Electrical Equipment, Appliances & Components; Paper Products; Food, Beverage & Tobacco Products; and Miscellaneous Manufacturing. The 12 industries reporting a decline in new orders in November, in the following order, are: Wood Products; Textile Mills; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Fabricated Metal Products; Petroleum & Coal Products; Machinery; Nonmetallic Mineral Products; Plastics & Rubber Products; Chemical Products; and Computer & Electronic Products.

Production

ISM®’s Production Index registered 49.1 percent in November, which is 2.9 percentage points higher when compared to the 46.2 percent reported for October, indicating the fourth consecutive month of contraction. “Three of the big six industry sectors expanded and three contracted, an improvement from October,” says Fiore. An index above 51.7 percent, over time, is generally consistent with an increase in the Federal Reserve Board’s Industrial Production figures.

The seven industries reporting growth in production during the month of November — listed in order — are: Apparel, Leather & Allied Products; Paper Products; Food, Beverage & Tobacco Products; Petroleum & Coal Products; Electrical Equipment, Appliances & Components; Miscellaneous Manufacturing; and Chemical Products. The 11 industries reporting a decrease in production in November — listed in order — are: Nonmetallic Mineral Products; Textile Mills; Printing & Related Support Activities; Primary Metals; Wood Products; Furniture & Related Products; Plastics & Rubber Products; Fabricated Metal Products; Transportation Equipment; Computer & Electronic Products; and Machinery.

Employment

ISM®’s Employment Index registered 46.6 percent in November, a decrease of 1.1 percentage points when compared to the October reading of 47.7 percent. This indicates contraction in November for the fourth consecutive month, and at a faster rate. “Three of the six big industry sectors expanded, and three contracted during the period, an improvement from the previous month. Labor force-reduction concerns remained generally constant,” says Fiore. An Employment Index above 50.8 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) data on manufacturing employment.

Of the 18 manufacturing industries, five reported employment growth in November: Paper Products; Computer & Electronic Products; Plastics & Rubber Products; Food, Beverage & Tobacco Products; and Chemical Products. The nine industries reporting a decrease in employment in November, in the following order, are: Wood Products; Printing & Related Support Activities; Petroleum & Coal Products; Primary Metals; Transportation Equipment; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Fabricated Metal Products; and Machinery.

Supplier Deliveries

The delivery performance of suppliers to manufacturing organizations was slower in November, as the Supplier Deliveries Index registered 52 percent. This is 2.5 percentage points higher than the 49.5 percent reported for October. “Supplier deliveries returned to slower conditions, recording marginal improvement compared to October. There were few comments regarding supply chain constraints, lead-time extensions or shortages,” says Fiore. A reading below 50 percent indicates faster deliveries, while a reading above 50 percent indicates slower deliveries.

The seven industries reporting slower supplier deliveries in November — listed in order — are: Textile Mills; Apparel, Leather & Allied Products; Computer & Electronic Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; Fabricated Metal Products; and Transportation Equipment. The four industries reporting faster supplier deliveries in November are: Electrical Equipment, Appliances & Components; Furniture & Related Products; Plastics & Rubber Products; and Machinery. Seven industries reported no change in supplier deliveries performance in November.

Inventories*

The Inventories Index registered 45.5 percent in November, a decrease of 3.4 percentage points from the 48.9 percent reported for October. “The index contracted for the sixth straight month, and at a faster rate reflecting improvement in production output and a continuing effort to match raw-material inputs with new-order receipts,” says Fiore. An Inventories Index greater than 44.3 percent, over time, is generally consistent with expansion in the Bureau of Economic Analysis (BEA) figures on overall manufacturing inventories (in chained 2000 dollars).

The three industries reporting higher inventories in November are: Nonmetallic Mineral Products; Miscellaneous Manufacturing; and Food, Beverage & Tobacco Products. The 12 industries reporting a decrease in inventories in November — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Plastics & Rubber Products; Textile Mills; Fabricated Metal Products; Paper Products; Petroleum & Coal Products; Chemical Products; Machinery; Computer & Electronic Products; Electrical Equipment, Appliances & Components; and Transportation Equipment.

Customers’ Inventories*

ISM®’s Customers’ Inventories Index registered 45 percent in November, which is 2.8 percentage points lower than the 47.8 percent reported for October, indicating that customers’ inventory levels were considered too low. “Customers’ inventories are too low for the 38th consecutive month, declining deeper into ‘too low’ territory, which is positive for future factory output,” says Fiore.

No industries reported customers’ inventories as too high during the month of November. The 11 industries reporting customers’ inventories as too low during November — listed in order — are: Wood Products; Textile Mills; Primary Metals; Nonmetallic Mineral Products; Fabricated Metal Products; Plastics & Rubber Products; Electrical Equipment, Appliances & Components; Food, Beverage & Tobacco Products; Computer & Electronic Products; Machinery; and Chemical Products. Seven industries reported no change in customer inventories in November.

Prices*

The ISM® Prices Index registered 46.7 percent in November, an increase of 1.2 percentage points from the October reading of 45.5 percent, indicating raw materials prices decreased for the sixth consecutive month. “Prices contracted in November, at a slower rate compared to October. Generally, prices continued to decline. Price stability remains elusive,” says Fiore. A Prices Index above 52.5 percent, over time, is generally consistent with an increase in the Bureau of Labor Statistics (BLS) Producer Price Index for Intermediate Materials.

The two industries reporting paying increased prices for raw materials in November are: Computer & Electronic Products; and Miscellaneous Manufacturing. The 12 industries reporting a decrease in prices for raw materials in November — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Furniture & Related Products; Plastics & Rubber Products; Primary Metals; Paper Products; Petroleum & Coal Products; Transportation Equipment; Electrical Equipment, Appliances & Components; Machinery; Chemical Products; and Fabricated Metal Products.

Backlog of Orders*

ISM®’s Backlog of Orders Index registered 43 percent in November, which is 1.1 percentage point lower than the 44.1 percent reported in October, indicating order backlogs contracted for the seventh consecutive month, at a faster rate in November. “Backlogs remaining at moderate contraction levels continues to weigh negatively on investment in equipment and labor. Four of the six big industry sectors’ backlogs contracted during the period,” says Fiore.

Four of the 18 industries reported growth in order backlogs in November are: Apparel, Leather & Allied Products; Food, Beverage & Tobacco Products; Miscellaneous Manufacturing; and Computer & Electronic Products. The 11 industries reporting a decrease in order backlogs during November — listed in order — are: Wood Products; Textile Mills; Printing & Related Support Activities; Furniture & Related Products; Transportation Equipment; Petroleum & Coal Products; Fabricated Metal Products; Machinery; Plastics & Rubber Products; Chemical Products; and Paper Products.

New Export Orders*

ISM®’s New Export Orders Index registered 47.9 percent in November, a decrease of 2.5 percentage points compared to the October reading of 50.4 percent, indicating that new export orders contracted after growing in October. “The index returned to contraction territory, which contributed negatively to the New Orders Index. Three of the six big industry sectors expanded, and two contracted during the period. Transportation Equipment continues to contract strongly,” says Fiore.

The five industries reporting growth in new export orders in November are: Food, Beverage & Tobacco Products; Computer & Electronic Products; Paper Products; Miscellaneous Manufacturing; and Chemical Products. The six industries reporting a decrease in new export orders in November — listed in order — are: Wood Products; Nonmetallic Mineral Products; Transportation Equipment; Plastics & Rubber Products; Fabricated Metal Products; and Machinery. Seven industries reported no change in new export orders in November.

Imports*

ISM®’s Imports Index registered 48.3 percent in November, 3 percentage points higher when compared to the 45.3 percent reported for October, indicating that imports contracted for the fifth consecutive month. “Three of the six big industry sectors contracted, with one expanding during the period. Respondents continued to note a need to place orders in advance of the Lunar New Year season in Asia,” says Fiore.

The six industries reporting growth in imports in November — listed in order — are: Wood Products; Furniture & Related Products; Paper Products; Plastics & Rubber Products; Computer & Electronic Products; and Machinery. The nine industries reporting a decrease in imports in November — listed in order — are: Apparel, Leather & Allied Products; Printing & Related Support Activities; Textile Mills; Electrical Equipment, Appliances & Components; Nonmetallic Mineral Products; Transportation Equipment; Miscellaneous Manufacturing; Chemical Products; and Fabricated Metal Products.

*The Inventories, Customers’ Inventories, Prices, Backlog of Orders, New Export Orders and Imports Indexes do not meet the accepted criteria for seasonal adjustments.

Buying Policy

Average commitment lead time for Capital Expenditures decreased by two days in November to 144 days. Average lead time for Production Materials decreased by two days in November to 61 days. Average lead time for Maintenance, Repair and Operating (MRO) Supplies increased by one day in November to 31 days.

Percent Reporting

Posted December 2, 2019

Source: Institute for Supply Management® (ISM®)