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May 23, 2019

US apparel industry points to higher prices in 2019

By Hannah Abdulla

US apparel manufacturers have reported an increase in prices paid during the first four months of 2019 and are predicting price increases for all of 2019 – with the majority pointing at tariffs as the reason for bumping up prices.

The responses were made as part of a survey of US purchasing and supply executives in both the manufacturing and non-manufacturing sectors by the Institute for Supply Management.

From a list of 16 industries, apparel, textile mills and leather products were the top three industries reported as having seen an increase in prices paid for the first part of 2019, according to the latest ‘Spring 2019 Semiannual Economic Forecast.’

When asked to predict 2019 price changes, 44% of respondents said they expect prices to increase by 4.8% in 2019 compared to the end of 2018. Meanwhile, 17% anticipate decreases averaging 4%. Including the 39% who expect no change in prices, survey respondents expect a net average prices increase of 1.5% for all of 2019.

However, the apparel, leather and allied products industry also believed revenues would grow in 2019. 45% of survey respondents said they believed revenues would grow 4% while 11% said they expected them to decline 11%. 34% said they believed they would see no revenue change in 2019.

When asked the biggest challenges they faced in the last six months, 76% reported hiring difficulties and 53.7% said they had to increase wages to recruit new hires.

59.1% said they believed tariffs had raised the price of the goods they produce and deliver to customers – with respondents pointing to an  average increase of 6.8%. But only 29.8% said they believed tariffs caused delays and supply chain disruptions.

“With 17 of the 18 manufacturing sector industries predicting revenue growth in 2019, US manufacturing continues to move in a positive direction,” said ISM chair Timothy Fiore. “However, finding and onboarding qualified labour and being able to pass on raw material price increases will ultimately define manufacturing revenues and profitability.”

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