Nicaragua booked the highest gain in apparel imports in August

Nicaragua booked the highest gain in apparel imports in August

Apparel imports into the US rose month-on-month in August as retailers remained focused on the back-to-school season and started to bring in their first autumn ranges – but continued to fall on the previous year. Within the top ten suppliers of apparel to the US, shipments from China, Vietnam and Bangladesh all declined on the year before, whereas Nicaragua booked the highest gain.

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 was up 5.9% month-on-month in August to 2.70bn square metre equivalents (SME), compared with 2.55bn SME booked in July.

The figures also show the volume of apparel imports fell 1.6% against August last year, and were down 1.9% to $8.24bn in value.

In terms of individual supplier countries, only four of the top-ten recorded a year-on-year increase, with Nicaragua booking the largest growth.

China – the largest supplier of apparel to the US – saw shipments drop 1.6% year-on-year to 1.30bn SME. Shipments, however, were up month-on-month from the 1.14m SME recorded in July. The second-largest supplier, Vietnam, booked a decline of 1.7% to 327m SME – this was lower than July's 13.5% growth.

Bangladesh, ranked number three in the top-ten league table, saw its exports to the US decline 5.3% year-on-year in August to 154m SME – the country's third monthly consecutive decline. Cambodia saw shipments drop 1% year-on-year to 89m SME, while India's increased 5% to 84m SME.

Of the remaining top-ten supplier countries, Mexico reported the largest year-on-year decrease of 6.1% to 71m SME, while Indonesia recorded a fall of 5% to 98m SME. Nicaragua, meanwhile, booked the highest increase at 5.5% to 51m SME. El Salvador booked year-on-year growth of 4.5% to 72m SME, while Honduras' shipments edged up 0.1% to 99m SME.

Total US apparel and textile imports in August were up 0.4%, reaching 6.10bn SME from 6.08bn SME in the same month last year. Textile shipments into the US were also up, rising 2% to reach 3.40bn SME.

Apparel volumes - 12-month overview

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

Year-to-date and six-year overview

While monthly trade data is often volatile, with big swings from one month to the next, a broader view of the year shows the volume of total US apparel and textile imports was up 2% in the January to August period to 42.58bn SME, from 41.74bn SME last year. Within this, textiles grew 2.8% to 24.55bn SME, while apparel shipments edged up 0.9% to 18.03bn SME.

In value terms, total US apparel and textile imports were down 1% to $70.05bn in the year-to-date, from $70.76bn in the same period a year ago. Apparel imports dropped 1.9% to $53.21bn, while textiles dropped 1.9% to $16.84bn.

Only four of the top ten apparel supplier countries booked growth during the first eight months of the year, with Vietnam seeing the largest increase at 5.6% to 7.68bn SME.

Mexico booked the second highest gain, at 5.3% to 2.35bn SME. Imports from China, meanwhile, were down 4.7% to 17.46bn SME – although the country remains by far the biggest supplier of apparel to the US with a 41.5% share of the market. While Bangladesh, the third-largest supplier with a share of 6.9%, booked the largest drop in shipments of 5.6% compared with last year to 3.51bn SME.

Cambodia meanwhile, booked a 2.9% drop year-on-year to 1.40bn SME, but this was an improvement on last month's 1.18bn SME.

Taking a broader look at the data over a six-year period from 2010 to 2016, Vietnam is the only country in the top ten to have seen a steady increase in import volumes to the US, growing from 1.91bn SME in 2010 to 3.35bn SME in 2016, increasing its share of total imports from 7.72% to 12.45%.

China's imports have fluctuated over this period, from 10.4bn SME in 2010, falling to 9.74bn SME a year later, before reaching a peak of 11.38bn SME in 2015, before falling again in 2016 to 11.17bn SME. The country has lost marginal market share, from 41.98% in 2010 to 41.50% last year.

Cambodia, Mexico and Pakistan, meanwhile, are all exporting less to the US than they were six years ago. Cambodia fell from 947.1m SME to 903m SME in 2016, decreasing its share of the total from 3.83% in 2010 to 3.35% last year.

Apparel volumes - 5-year overview

Source: The Department of Commerce's Office of Textiles and Apparel (OTEXA)

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Facts behind the figures

India, which booked the second highest gain for apparel shipments in August, remains a marginal player in world apparel trade. That said, efforts are underway to diversify its garment offering, and the country's apparel industry benefits from a huge untapped pool of low-cost workers, and a vertical cotton industry from farming to the production of finished goods. 

In June last year, India's garment exporters widely welcomed a series of financial and labour reforms announced by the government to generate 10m jobs and boost exports by $30bn over three years. The country's textile and apparel industry also received informal assurances of increased central government support after it was largely ignored in this year's national budget.

The sector, however, is facing a continued decline in exports due to global conditions, rupee overvaluation and uncertainties under the GST regime. To add to this, the government last month announced it will levy a new duty drawback rate on garment exports from the country, which the industry believes will slow down exports.

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Nicaragua, meanwhile, has again appeared in the top ten list, replacing Pakistan. Benefiting from the Dominican Republic-Central America Free Trade Agreement (DR-CAFTA), Nicaragua is one of the suppliers in the Western Hemisphere offering faster speed to market for US fashion brands. A number of Nicaragua's manufacturers have set out their ambitions to boost production to meet this rising demand.

The country, which produces for companies including Under Armour and Nike, benefits from low wages and a stable economic and political environment. Nicaragua's government has also managed to negotiate five-year collective wage agreements, adding further stability for manufacturers.

In percentage terms, of the Central American countries that export to the US, Nicaragua's textile export volume grew the fastest last year. In 2016, export volumes amounted to 531.3m SME compared to 488.1m in 2015. The country operates around 264 apparel and textile companies in its free zone, according to the National Free Zone Commission (CNZF).

Nicaragua apparel and footwear firms to double in size

While there continue to be concerns that increasing wages are undermining the competitiveness of China's garment production on the world stage, the latest figures continue to confirm its appeal to apparel buyers as rising prices are largely being offset by productivity gains. No other 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. A new survey of supply chain executives appears to back this up.

The country also continues to lead the way when it comes to efficiency and infrastructure. Data on China's apparel imports to the US last year show the country's prices are now lower than they were six years ago. 

And Chinese companies are continuing to innovate. Manufacturing giant TianYuan Garment Company – the largest producer of apparel for Adidas worldwide – is to make T-shirts in the US using a fully automated robotic workline.

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