Economic Update

In the third quarter of 2024, the textile and clothing sector situation remained challenging. Persistently higher energy costs in Europe (compared to Asia and North America), bureaucratic hurdles, and the cost of compliance with new regulations are clearly among the key challenges for companies. Continued declines in T&C production and turnover suggest external pressures such as supply chain issues, lack of demand, and high operational costs. The clothing sector showed the sharpest declines across both indicators, signalling the most significant challenges among the entire value chain. Companies in the downstream sector are also facing higher competitive pressure from e-commerce, leaving little room to raise sales prices.

Despite these challenges in production and turnover, employment levels in the clothing sector were relatively stable as compared with the previous quarter, indicating efforts to retain the workforce. However, employment dropped as compared with the previous year, as firms have reduced their workforce or have paused recruitment efforts due to the highly uncertain outlook and the high labour costs. On the external side, our trade deficit has deteriorated, as imports from third countries rose markedly while exports declined. Looking ahead, the overall trade outlook suggests further challenges ahead, particularly upside risks from potential tariff implementation in the US and unfolding retaliation measures.

Despite these uncertainties, the EU business sentiment in early 2025 showed slight improvement both in the textile industry and in the clothing segment. The January positive trend was mainly driven by managers’ brighter production expectations, despite subdued demand for goods. From the consumer perspective, confidence remained stable, whereas retail trade confidence edged down due to more pessimistic expectations about the future business situation.

For more information on our Economic Update, please contact Roberta Adinolfi.