WASHINGTON — Weak domestic demand pressured apparel and textile imports to the U.S. in May down 0.75 percent on a year-over-year basis as a rise in textile imports was insufficient to offset a falloff in imports of apparel, a report from the Commerce Department’s Office of Textiles and Apparel showed Wednesday.
Apparel imports declined 7.2 percent in May to 1.8 billion square meter equivalents from a year earlier, as retailers and brands continued to carry leaner inventories through the summer due to the weak U.S. economy.
U.S. textile imports from the world rose 3.9 percent to 2.8 billion SME in May compared with May 2011, while combined apparel and textile shipments fell 0.75 percent to 4.6 billion SME.
“The economy has not turned out as well as people were hoping, so people are starting to cut back on orders,” said Nate Herman, vice president of international trade at the American Apparel & Footwear Association, noting the declining apparel imports are a reflection of those business decisions. “[Companies] have inventories now because they thought demand would be better by this time, and instead of placing new orders, they are trying to clear out and thin out their inventories.
The report constituted a pause in Vietnam’s assumption of export market share versus China, while the numbers on U.S. exports added evidence of weakening consumer demand in both Europe and Asia.
Apparel and textile shipments from China, the top supplier to the U.S., edged up 0.96 percent in May to 2.1 billion SME compared with a year earlier. Textile imports boosted overall shipments from China, rising 3.5 percent to 1.49 billion SME, while apparel imports fell 4.1 percent to 699 million SME. Combined apparel and textile shipments from Vietnam, which had been taking share away from China, fell 8.7 percent to 256 million SME year-over-year.
Nine of the top 10 apparel-supplier nations posted declines in apparel imports to the U.S. El Salvador was the only country to post an increase in imports in May, rising 0.6 percent to 72 million SME compared with May 2011. Cambodia posted the largest year-over-year apparel import decline, slipping 19.6 percent to 62 million SME.
Four of the top 10 countries posted increases in combined textile and apparel shipments, including China; Pakistan; South Korea, with a double-digit increase of 12.7 percent, and Canada.
Combined apparel and textile shipments from Central America, which had benefited somewhat under the Central America Free Trade Agreement from a shift in production from Asia back to the Western Hemisphere, fell 4 percent in May to 269 million SME compared with a year earlier.
Herman said small businesses that moved into Central America in the last couple of years because of rising costs in China have shifted back out of the region due to the difficulties in meeting the trade agreement’s strict origin rules for duty-free treatment.
“I think a lot of people tried it and realized it was too complicated to work there,” Herman said.
Vietnam, Indonesia and Cambodia will continue to benefit from rising costs in China, he said. Apparel imports from Cambodia fell sharply in May, but Herman expects them to rebound following an agreement by the Cambodian government, under union pressure, to increase wages and cost-of-living allowances for garment workers.
The overall trade deficit narrowed to $48.7 billion in May from $50.6 billion in April.
Gregory Daco, principal U.S. economist at IHS Global Insight, said exports rose “temporarily” in May, by 1 percent, due to stronger capital goods exports, notably telecommunication equipment and industrial machinery.
But he warned: “Make no mistake: U.S. exports are slowing as a result of slower growth in China, a deepening recession in Europe and a stronger U.S. dollar. Drops in automotive and consumer goods were signs of this slowdown.”
Daco said the outlook for foreign trade is “one of weaker growth constraining exports, and slow domestic spending limiting the pull for imports.”