Average import costs, represented by the price per square metre equivalent (SME) of cotton-dominant apparel, increased by 1.9 per cent month-over-month in April (seasonally adjusted). However, year-over-year import prices were down 5.1 per cent. Compared to the average in 2019, sourcing costs for cotton-dominant apparel in March were 6.2 per cent higher.

After three consecutive months of declines, the Conference Board’s Index of Consumer Confidence rose by 4.5 points in May, reaching a value of 102.0. Although this is slightly lower than the mid-point of the range (95-115) that has contained values since the second half of 2021, it remains above the long-term average of 93.0, Cotton Inc said in its Executive Cotton Update - US Macroeconomic Indicators & the Cotton Supply Chain - June 2024.

In inflation-adjusted terms, overall consumer spending remained flat month-over-month in April (-0.1 per cent). Year-over-year, overall spending was 2.6 per cent higher, with an average annual growth rate of 2.4 per cent over the past twelve months. However, consumer spending on apparel decreased by 1.5 per cent month-over-month in April but was 1.5 per cent higher year-over-year.

The latest International Monetary Fund’s (IMF) World Economic Outlook report highlighted divergence in economic growth and policy across major economies. While GDP growth and inflation rates followed different trajectories in 2023, recent central bank decisions indicate a separation in interest rate policy. In early June, the European Central Bank (ECB) made its first rate cut since early 2022, following similar moves by Canada and other European countries outside the Euro Zone. Despite sluggish economic growth, European inflation figures remain above the two per cent target.

In contrast, the Federal Reserve in the US has revised its outlook due to stronger-than-expected economic growth and inflation. Core inflation remains above the target of two per cent (2.7 per cent in April). Economic growth has averaged 3.1 per cent annually over the past four quarters, and the labour market remains solid despite a marginal increase in the unemployment rate to four per cent in May.

The US economy added 272,000 new jobs in May, surpassing the 165,000 added in April but below the 310,000 added in March. The current twelve-month average stands at 230,000 new jobs per month. The unemployment rate edged up from 3.9 per cent to four per cent in May, marking the highest rate in over two years but still low by historical standards. Wages increased by 4.1 per cent year-over-year in May, slightly higher than the 4.0 per cent growth in April, despite the longer-term downward trend in wage growth since the Federal Reserve began increasing interest rates in March 2022.

Fibre2Fashion News Desk (KD)