Apparel shipments slip on weak US consumer spending

Shaken consumer confidence in the US is biting India���s nearly $10-billion apparel export industry, with shipments declining nearly 8-10 % by value in recent months. The figures emerging from the US Department of Commerce suggest that Indian apparel exports dropped over 2% by value in the six months to June, but the decline has accelerated May onwards.

The apparel shipments to US is diving for the first time since the dismantling of the quota regime in 2001. Several of the top American retailers like Saks, JC Penny and Kohl���s reporting middling sales more than half way into the calendar year.

The total apparel imports into US fell by 4.04% by value to $32.99 billion during the first half this year, with India faring better than China and Sri Lanka that witnessed a more pronounced slowdown in shipments.
The Wall Street collapse and the mounting job losses in the financial services sector is expected to weaken the consumer sentiments further, sectoral analysts warned.

While the shipments to US reported marginal 1.26% growth during January to April period, it appears to have recorded 8-10 % negative swing in May and June. Sectoral analysts said the figures, especially the May-June data, confirm fears about weakening consumer sentiments in US impacting the local exporters in a significant way, with some of them not ruling out further belt tightening by the domestic vendors leading to more job cuts.

The six-month apparel exports to US by value was estimated at $1.74 billion compared to $1.78 billion in the yearago period. The exports declined in volume terms as well, marginally tough, from 490 million sq meter to 486 million sq meter. Besides, the slow consumer offtake, the volatile rupee also impacted shipments from Indian garment vendors , sources said.

���Apart from the recession, the rupee being at Rs 39 and being at Rs 46 is impacting as a lot of companies have done forward contract booking at Rs 41-42 rates. Indian vendors are unable to catch the recent upswing in the dollar as far as taking new orders is concerned,��� Nitin Mandhana, Vice Chairman & Managing Director of Indus Fila, said.

In context, the biggest apparel exporter China saw shipments to US come down over 6% by value to $9 billion in the January-June half. Chinese exports dropped a substantial 7% by value in the same period. Sri Lanka���s shipments lost 10.20% by value and over 13% by volume.

���Even factors like China���s share in apparel exports going down will benefit India only marginally as most of this business is going to other countries, and whatever the industry gets from China���s share is being mitigated by recession ,��� Mr Mandhana added.