Steady growth in the wool industry at the worsted weaving and spinning stages is being supported by an improved business environment, according to the latest Woolmark Business Survey.

Improved ordering in the June quarter also led to a turnaround in combing activity, which had been depressed for much of 2005.

"Conditions, generally, have been more consistent or even slightly improved for the ordering of wool," said Chris Wilcox, Woolmark chief economist.

"This looks as though it will continue in the September quarter, which is good news for raw wool demand. There could, however, be some softening later in 2006 ahead of a slowing global macroeconomic cycle."

Among key international markets, China is experiencing a "massive" shortage of both raw wool and top stocks at combing, and steady output growth is expected to continue in the next quarter.

East Asia is showing improved orders among all woollen spinners, with demand expected to be firm in the September quarter.

There was real output growth across all sectors in Western Europe during the quarter, with the exception of worsted weaving, but most firms remain neutral in their outlook despite buoyant figures.

And in Australia, activity in the domestic early stage processing sector remained well below expectations in June, with the outlook for September moderately pessimistic.

The Woolmark Business Survey is conducted quarterly on a global basis among more than 250 leading wool industry companies.