Textile and garment exports continue to recover.

PSI observes a recovery in textile exports, reflecting cooling inflation and a gradual rebound in consumer spending; orders for textile businesses in the first six months of 2024 are more promising.

Exports of textile fibers and yarns in the first half of this year reached 895.3 thousand tons, an increase of 7.4% compared to the same period in 2023, with a value of 1.96 billion USD, an increase of 3.5% compared to the first six months of 2023.

"The positive recovery compared to the same period last year is due to companies re-importing yarn to serve the 2024 autumn-winter season; Chinese yarn prices have risen again due to the recovery in oil prices. While the value of exports to China remained almost unchanged compared to the same period, reaching $1.04 billion, up 0.5%, there were more significant improvements in the South Korean and US markets, recording export values ​​of $233 million, up 20.8%, and $95 million, up 31.1%, respectively."

Order expectations continue to increase.

Citing feedback from textile and garment businesses, PSI stated that the textile and garment industry continues to recover despite low demand. Some businesses with advantages in diverse customer bases and ESG factors, such as TNG and Eclat Textile (Taiwanese FDI), have already secured orders until the beginning of Q4 2024. Meanwhile, MSH plans to bring its new Xuan Truong 2 factory into operation from the end of 2024, demonstrating the company's confidence in the return of orders.

PSI predicts that textile and garment orders will continue to be secured and increase in the second half of this year.

"Therefore, we expect orders to continue to be secured and increase in the second half of the year as the shopping season approaches in major markets. We also observed that in the first half of 2024, the total value of imported raw materials for production such as fibers, yarns, and fabrics increased by 20.7% and 11.9% respectively compared to the same period in 2023. This signals that the situation for textile and garment export orders remains quite positive and promising for the second half of 2024," commented Mr. Nguyen Minh Quang, an analyst at PSI.

According to a report by PSI, US apparel inventories in the first half of 2024 reached $2.172 billion, a slight decrease of 2.4% compared to the same period last year, and remaining lower than in the second half of 2022 and the first half of 2023.

Meanwhile, retail clothing sales in the US in the first half of 2024 increased slightly by 1.2% compared to the same period last year, continuing the recovery trend from October 2023.

"We expect the US apparel retail market to maintain its recovery trend in the second half of 2024, especially during the year-end shopping season, thereby boosting new export orders," Mr. Quan observed.

According to this expert, PSI also observed that American consumer spending is gradually recovering after inflation cooled down. The US consumer confidence index in June 2024 reached 100.4 - within a similar narrow range maintained over the past two years, which also reflects that consumer demand is still being sustained.

Therefore, PSI expects orders for textile and garment businesses to recover significantly from the fourth quarter of 2024, as this is also the time when brands begin preparing for the Spring/Summer 2025 season.

However, PSI believes that the gross profit margin of textile and garment businesses will be difficult to increase significantly due to rising labor costs, as the minimum wage is expected to increase by 6% from July 2024.

Thu An