EU clothing industry optimistic about growth with 2.1 points rise in business confidence

With sales and exports growing at a sustained pace, the EU clothing industry witnessed significant improvement in Q4 FY21performance. Most clothing companies in the region reached their pre-pandemic levels of growth during the quarter, says latest Euratex report. Clothing production surged 10 per cent during the quarter over Q4 FY20 while turnover increased 21.4 per cent. Retail sales during the quarter also rose 17.9 per cent.

Pandemic-induced challenges slows textile growth

However, the textile industry expanded at a much slower pace. Though it recovered from the strong contraction in 2020, the industry failed to reach pre-pandemic levels. Textile production during the quarter increased 2.4 per cent from the Q4 FY20 while turnover increased 6.4 per cent. Retail sales in textile industry grew 17.9 per cent during the quarter. The pandemic slowed shipments besides disrupting global supply chains. This caused acute raw material shortages, affecting consumption patterns across the world. The textile and clothing industry also remained troubled by the constant rise in raw materials and energy prices.

The EU Business Confidence Indicator indicates 1.7 points decline in textile industry over the next few months. The decline is mainly attributed to energy-related challenges currently being faced by the industry. The clothing industry seems more optimistic with a 2.1 points rise in business confidence in the next few months.

Consumers’ confidence falters over future uncertainties

Managers’ confidence in both textiles and clothing remains higher than the long-term average and pre-COVID level in Q4 2019. However, consumer confidence has dropped, following the collapse in their expectations about the general economic situation and assessment of own future financial situation. Confidence of retailers has also dropped they failed to assess expected business situation. Their selling expectations for the next three months have reached unprecedented highs as energy and raw material prices have surged sharply in the last few months.