Retail prices for garments increased by 0.7 per cent month-over-month (MoM) and 3.6 per cent year-over-year (YoY) in December 2022, as per a report by Cotton Incorporated. While still higher than the average in 2019 by 2.5 per cent, the increase in retail apparel prices was lower than the average in 2018, only increasing by 0.7 per cent.
The cost per square meter equivalent (SME) of cotton-dominant apparel reached a record high in December in the US, with import prices coming in at $4.26/SME in seasonally-adjusted terms. Despite the recent high costs, import volumes have also been volatile, with US apparel imports up 0.4 per cent YoY in terms of SME for the 2022 calendar year, according to the US Macroeconomic Indicators & the Cotton Supply Chain – February 2023 by Cotton Inc.
In the first half of 2022, import volumes reached record highs, with both the highest and lowest monthly imports recorded since 2005. The swing in monthly volumes was 45 per cent in seasonally-adjusted data, as a reversal in the macroeconomic outlook, inventory accumulation, higher costs, and concerns about consumer spending all contributed to volatility in orders.
The Index of Consumer Confidence by the Conference Board decreased by 1.9 points in January. Although the current level of 107.1 is higher than most values in the latter half of 2022, it is still lower than values recorded in 2021. Consumer spending in November in the US decreased by 0.3 per cent MoM but increased by 2.2 per cent YoY. Spending on clothing was down 1.5 per cent MoM, but up 3.4 per cent YoY.
In January, the US economy is estimated to have added 517,000 jobs, the strongest increase in five months and almost double the job additions in December. The unemployment rate decreased slightly from 3.5 per cent to 3.4 per cent which is among the lowest recorded values. Wages increased by 4.4 per cent YoY in January, however, the wage growth trend has been declining since March 2022, when it was 5.9 per cent. The overall inflation rate in December was 6.5 per cent.
The IMF recently released its report on global economic growth, highlighting that inflation may be peaking but low growth remains a challenge. The projections for world GDP growth have been increased to 2.9 per cent, up 0.2 percentage points from October, but still one full percentage point below the average from 2000-2019. The increase in projections is due to consumers in the US and EU proving more resilient to inflation than expected.
Strong labour markets, savings, and easing supply-side cost pressures supported consumer demand. However, the eventual pullback in consumer spending may weigh on growth, as savings cannot be drawn down indefinitely. The IMF forecasts US GDP growth to be 1.4 per cent in 2023 and 1 per cent in 2024. The interest rate increases are expected to weigh on future growth as well.