Vietnam continued to lead US apparel import growth in July

Vietnam continued to lead US apparel import growth in July

Apparel imports into the US continued on their upward trajectory in July, with all but one of the top ten supplier countries booking year-on-year growth. While Vietnam led the pack, posting a solid double-digit gain for a fifth consecutive month, strong gains were also recorded by China, Bangladesh and Cambodia.

The latest figures from the Department of Commerce's Office of Textiles and Apparel (OTEXA) show the volume of US apparel imports from all sources grew 7.1% year-on-year in July, down from the 7.7% increase in June. Imports reached 2.63bn square metre equivalents (SME), up from 2.46bn SME in July last year.

Breaking it down into individual supplier countries, all but one of the top ten recorded growth. Shipments from China - the largest supplier of apparel to the US - were up 7.8% to 1.20bn SME. Nearest rival Vietnam grew 12.8% to 270m SME, compared to the same month a year ago.

And Bangladesh, ranked number three in the top-ten league table, saw apparel shipments rise 8.8% to 172m SME.

Of the remaining supplier countries, Cambodia recorded the strongest growth at 8.3% to reach 84m SME, followed by Honduras (up 7.6% to 109m SME) and El Salvador (up 7.2% to 87m SME). Year-on-year import gains were also reported by India (up 3.4% to 86m SME), Pakistan (up  to SME) and Indonesia (up 0.7% to SME).

However, Mexico saw apparel shipments decline 9.5% year-on-year to 76m SME.

Facts behind the figures

While there are concerns that increasing wages are undermining the competitiveness of China’s garment production on the world stage, the country continues to lead the way when it comes to efficiency and infrastructure.

China remains a compelling source for apparel buyers as rising prices are largely being offset by productivity gains. With its 10,916 garment manufacturers (with annual sales above CNY20m) churning out 29.6bn pieces in 2014, up 1.6% year-on-year, no country can match China in terms of the size of its supply base, its range of skills, its quality levels, its product variety and the completeness of its supply chain.

However, apparel industry executives last month played down the potential impact of the decision by China's central bank to reduce the value of the yuan to its lowest rate against the US dollar in almost three years.

For the clothing and textile sector, the currency devaluation could benefit exports from China thanks to lower prices, but the flipside for retailers and brands shipping in goods to sell in China is to take a hit on margin or increase the price of their products.

Vietnam, meanwhile, has benefited as producers and buyers diversify their supply chains, helped by its low labour costs and its industry focus on specialisation, modernisation, and increasing value added.

Foreign direct investment continues to flow into the country in anticipation of the expected passage of the Trans-Pacific Partnership (TPP) trade agreement. Luen Thai Holdings is the latest company to boost its business in Vietnam, last month announcing it will continue to devote resources and efforts in its Vietnam projects.

After the latest round of TPP talks failed to clinch a deal in July, the race is now on to secure an agreement before the US presidential elections halt progress. However, some industry executives now warn that the trade deal may unravel unless it is agreed by Christmas.

And Bangladesh's clothing industry continues to build on its momentum as a low-cost sourcing destination, despite factory safety issues. Since the collapse of the Rana Plaza building collapse in April 2013, two major remedial plans together with the government have worked to resolve issues over safety and worker rights, including the closure of some garment factories.

Year-to-date

While monthly trade data is often volatile, with big swings from one month to the next, a broader view of the year so far shows total US apparel and textile imports increased 8.9% between January and July to reach 36.37bn SME from 33.40bn SME last year. Within this, textiles grew 11.2% to 21.17bn SME, while apparel shipments were up 5.9% to 15.20bn SME.

Again, all but one of the top-ten supplier countries booked growth. Movement within the top three during the seven months shows China rose 5.9% to 5.93bn SME, Vietnam grew 15.4% to 1.80bn SME, and Bangladesh increased 11.2% to 1.11bn SME.

The other winners included Honduras (up 4.5% to SME); Cambodia (up 1.1% to 593m SME); India (up 6.9% to 650m SME); Mexico (up 0.3% to 548m SME); El Salvador (up 0.5% to 468m SME) and Pakistan (up 0.5% to 349m SME).

Indonesia, however, saw apparel shipments drop 1.5% to 767m SME.