APPAREL IMPORTS DOWN IN 7 OF LAST 9 MONTHS
U.S. imports of apparel (HS code 61) slid 0.9% year-over-year in January after jumping 8.8% in December. Imports are down in 7 of the last 9 months. For all of 2012, apparel imports totaled $41.1 billion, down 1.7% over the prior year, partly owed to weak disposable income growth and soft demand from downstream retailers.
REAL DISPOSABLE PERSONAL INCOME GROWTH PER CAPITA FLAT IN LAST 5 YEARS
A major driver of apparel imports is disposable personal income because ordinary clothes aren’t luxury goods.
U.S. real disposable personal income (RDPI) per capita grew a tiny 0.8% in 2012 over the prior year, and is up 0.2% in February 2013 over February 2012. The graph shows that since January 2000 RDPI per capita expanded steadily through end of 2006 but since then growth has flattened. This is downbeat for the outlook of apparel imports as they are linked to disposable income growth. RDPI per capita was up 14.8% in December 2006 over January 2000, and up a similar 14.5% in February 2013 over January 2000.
CHINA REGAINING SHARE OF U.S. APPAREL IMPORTS IN 2012
In previous reports I’ve analyzed how China is losing share of U.S. imports of major labor-intensive goods including footwear, toys and furniture. But, in the case of apparel, the facts show otherwise.
China is the largest supplier of apparel to the U.S. and to the rest of the world by dollar value. China sourced 36.4% of all U.S. apparel imports in 2012, up by 0.3 percentage point from 2011, but still down by 0.3 percentage point from 2010. Although imports from China declined modestly last year, a small rebound was seen in its share of imports helped by marked decreased shipments from other emerging economies. Other source countries that gained significant share last year were Vietnam, up by 1 full percentage point to a total import share of 10.1%, and El Salvador, up by 0.3 percentage point to a total import share of 3.9%.
In terms of annual growth, the data shows that imports from China dropped 1% last years after rising by 8% in 2011. Rising wages and costs challenge the obvious benefits of a well-developed manufacturing infrastructure, prompting relocation of production activities to Southeast Asia and Central America. Imports from Vietnam jumped 10% last year following an increase of 13% in 2011, while imports from El Salvador rose 6% last year following an increase of 6%. Strangely, imports from Mexico declined 7% last year after growing by 6% in 2011 despite near-sourcing advantages. Mexico’s share of imports declined from 3.4% in 2011 to 3.2% in 2012.