Economic Update

Textile and clothing industry evolution
in the 3rd quarter 2023 and short-term prospects

The T&C performances worsened in Q3 2023, despite a stabilisation of the textile production.
Looking forward, managers’ confidence slightly improved across the entire value chain.

The T&C sector showed poor economic performances during the third quarter of 2023, demonstrating persistent tough market conditions. The textile industry managed to stabilise production volumes on a quarter-to-quarter basis, but suffered a sustained drop in EU exports and a deterioration of business activity. In the clothing segment, despite a growth in exports outside the EU, turnover evolution turned negative and output reported the strongest decline since the Covid-19 crisis. Finally, the labour market evolution in the textile industry indicated a slight decline but turned positive in the clothing sector. Besides labour shortages and weak demand, rising costs remained among the biggest challenges companies are facing.

These trends are in line with the broader economic performance of the European economy. The European Commission reported[1] that the EU economy has lost momentum in the first 3 quarters of 2023, following a robust post-pandemic expansion. The loss of growth momentum has been underpinned by the lack of a solid growth driver, with weakness especially in consumption but also on the external side. Private consumption broadly stagnated on aggregate, as nominal wage growth continued to lag behind inflation. On the external side, global trade provided little support. On the output side, gross value added in industry was held back by weak demand and high energy costs.

Looking forward, the business sentiment in the T&C industry is improving, suggesting that economic activity will expand in the next quarter. The EU Business Confidence indicator² for the months ahead picked up in the textile industry, driven by an improvement of all its components (i.e. managers’ expectations of production for the months ahead, their assessment of order-book levels and adequacy of stocks of finished products). Also the business sentiment in the clothing sector improved slightly in December, as managers were somewhat more positive about the current level of overall order books and the adequacy of stocks of finished products. By contrast, production expectations in the clothing industry deteriorated further.

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

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