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Thursday, January 21, 2016

US retail wool sales positive

By Chris Wilcox  |  Source: US Department of Commerce, Office of Textiles and Apparel, Bureau of Economic Analysis

Key points

  • Retail sales of clothing in the US have grown strongly in 2015 to date.
  • This growth has been helped by a steady improvement in economic conditions and an 8-year high in consumer confidence however US imports of wool clothing have declined in 2015.
  • There has been a sharp decline in wool knitwear imports in recent months.
  • US imports of wool wovenwear have slid in spite of a strong rise in imports of women’s overcoats.

Retail Sales In US Positive But Wool Product Imports Disappoint Fig1

Retail Sales In US Positive But Wool Product Imports Disappoint Fig2

 

Clothing retail sales in the US have grown steadily throughout 2015 on the back of an improving economy with consumer confidence at 8 year highs. In spite of this, US imports of wool clothing have been below year earlier levels in recent months, pointing to lower availability of wool clothing at retail during the current Autumn/Winter season.

The US is the world’s second largest consumer market for wool clothing, after China, and the major portion of the annual wool retail sales in the US are purchased in the Autumn/Winter period each year (between October and February). However, the latest data available from the US is rather mixed for the prospects for wool. The good news is that US retail sales of clothing in general has been well above year earlier levels for every month throughout 2015 up to November. This is the result of a solid improvement in economic growth and consumer confidence levels not seen since before the Global Financial Crisis (GFC) in 2009. For the eleven months of 2015 to November, the value of retail sales of clothing in the US was 4.3% higher than for the same period in 2014. This is by far the fastest rate of growth in clothing retail sales of the past five years. In fact, clothing retail sales grew by just 0.5% to 1.5% per year between 2012 and 2014.

This strong growth rate is very encouraging for the sale of wool clothing over the Autumn/Winter period this year, as long as the wool product is available. This is where the latest data is disappointing. The vast majority of the US’ purchases of wool clothing at retail is imported, with the largest supplier being China. In the eleven months of 2015 to November, the value of US’ imports of wool clothing was 8.6% down compared with the same period in 2014. At US$3.02 billion, it was the lowest for the January-November period since 2009, the year of the GFC. In terms of the number of pieces of imported wool clothing, the figure for the eleven months to November was down by over 9% and was even lower than in 2009.

Figure 1 shows the trends in the value of US imports of wool wovenwear and wool knitwear over the past eight years. As shown, imports of wool knitwear have slumped in the past few months after a sustained period of high import levels. US imports of wool wovenwear have also slid back over the past 12 months.

On closer inspection, while men’s wool wovenwear imports have pulled back in the first eleven months of 2015, women’s wool wovenwear imports have been sustained due to a strong increase in imports of overcoats (figure 2).

What does this mean?

The strong growth of retail sales in the US should help the sale of wool clothing of the current Autumn/Winter period. In turn, this should encourage retailers to increase their orders for 2016. However, the decline in imports of wool clothing by the US in 2015 suggests that the availability of wool clothing at retail over Autumn/Winter will be constrained.

The recent sharp decline in imports of wool knitwear by the US is particularly disappointing, although this is partly offset by the very strong jump in imports of women’s wool overcoats. These generally disappointing results for US imports could hurt order levels from retailers to garment manufacturers in the first half of 2016, which could in turn negatively affect raw wool demand. One exception could be demand for cross-bred wool and for Merino cardings, both of which tend to be used in production of overcoats.

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