WASHINGTON — It’s beginning to look a lot like a markdown Christmas is in the waiting.
Apparel and textile imports in August rose to their highest one-month volume in two decades, despite flagging consumer confidence and a dim outlook for the holiday season.
Combined shipments of textiles and apparel to the U.S. increased 28.6 percent to 5.4 billion square meter equivalents, the highest since 1989, when the current electronic database of figures began, the Commerce Department’s Office of Textiles & Apparel said Thursday. Industry imports were also the most for the first eight months of any year in the 21 years of tracking.
The outlook for holiday 2010 is better than last year when the recession still gripped the U.S., but analysts have already predicted a season dogged by promotions and discounts. Consumer confidence hit a seven-month low in August, according to the Conference Boards’ Consumer Confidence Index. The National Retail Federation has predicted a 2.3 percent gain in total holiday sales to $447.1 billion. Last year, holiday sales eked out a 0.4 percent increase over the previous year, and in 2008 holiday sales declined 3.9 percent, the NRF said.
The outlook for retailers in recent months has deteriorated and some might have been overly optimistic with orders, said Charles McMillion, president and chief economist with MBG Information Services.
“They could have ordered more than they need,” McMillion said. “A few months ago, holiday sales looked like they were going to be better than they probably are going to be, and that’s when they placed these orders.”
Apparel shipments increased 23.1 percent to 2.5 billion SME and textile imports rose 33.9 percent to 2.9 billion SME. Record year-to-date shipments showed apparel and textile imports climbing 21.1 percent to 36.5 billion SME. August marked the fourth straight month of double-digit industry import increases and all of the top 10 apparel and textile suppliers to the U.S. posted major gains.
The overall U.S. trade deficit widened, reaching $46.3 billion in August from $42.6 billion in July, the Commerce Department said. Gregory Daco, U.S. senior economist with IHS Global Insight, said the import surge was driven by consumer goods.
“With underlying final sales growth still weak, it is a puzzle as to where these imports are going,” Daco said. “It’s likely that part of this month’s imports will end up in inventories.”
Jonathan Gold, vice president of supply chain and customs policy for the National Retail Federation, said as they gear up for the holidays, retailers are ordering in line with their expectations for consumer demand.
“They are right in line with what they’re expecting [for the holiday season],” he said.
It is possible that some retailers might be saddled with excess inventory when the holiday shopping crowds clear, Gold said, but, “It depends on the retailer. Most are being very conscientious about what they’re bringing in.”
When the recession hit two years ago, it abruptly slowed trade, said Chris Cornell, an economist with Moody’s Economy.com, and the depth and severity of that drop explains part of the rapidly increasing import numbers in recent months.
“The growth rates we’re seeing right now are primarily driven by a catch-up effect,” Cornell said.
The top five apparel suppliers to the U.S. in August were China, Vietnam, Bangladesh, Indonesia and Honduras. China was also the largest textile supplier, followed by India, Pakistan, Mexico and South Korea.
China’s combined shipments of textiles and apparel rose 35.2 percent to 2.8 billion SME, driven by increases in imports of knit fabrics, handbags and luggage. Imports from Bangladesh were up 43.4 percent, led by shipments of women’s and men’s underwear, and men’s and boys’ knit shirts, dresses, nightwear, pajamas, trousers and shorts. Vietnam’s imports advanced 33.3 percent, with big gains in underwear and special purpose fabric.
Countries in Central America continued to regain market share. Apparel shipments from Honduras rose 40.6 percent, led by underwear, hosiery and men’s and boys’ knit shirts, while shipments of apparel from El Salvador grew 43.5 percent. Mexico’s resurgence continued, with imports up 29.6 percent. Among other major suppliers, industry imports from India rose 24.4 percent, shipments from Pakistan grew 14.1 percent, Indonesia’s increased 23.5 percent, South Korea’s gained 16.5 percent and Canada’s rose 19 percent.
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