The 2009 Holiday Season
Robert S. Reichard, Economics Editor
A less rosy picture is seen when it comes to industry jobs, which should continue to shrink. Much of the worker decline over the past few years can be traced to the big slide in mill activity. But another part simply reflects increasing productivity. As such, even with the expected leveling off in mill activity projected over the next few years, the number of industry employees is expected to continue shrinking. One recent long look ahead by the Bureau of Labor Statistics projects a 2.75-percent annual rate of employment decline in the basic textile mill sector over the 10-year period ending in 2016. The rate of decline in the more highly fabricated textile product sector over the same period of time -- though at a lower 1.25-percent annual rate -- can also be considered significant. It means the overall US industry workforce, which has been more than halved since 2000, will continue to contract. But, as pointed out previously, there is a brighter side to all this. Specifically, the increasing productivity factor noted above, along with only minimal pay increases - expected to average in the low 2- to 3-percent range over the next few years -- will continue to reduce unit labor costs, and in the process help keep the US industry competitive in today's one-world textile/apparel market.
Calling the turn on cotton quotes may be a bit easier now. That's because the US Department of Agriculture (USDA) has removed its long-term ban on forecasting prices of this key natural fiber. In fact, the agency's economists have developed a new mathematical model that predicts prices on the basis of changes such as variables in US and global supply/demand factors, macroeconomic developments and global policy shifts. Some of the model's findings: A 1-percent increase in US supply from the previous year will cause US cotton tags to drop about 0.9 percent in real terms; changes in foreign supply affect US prices on a nearly one-to-one basis, with quotes falling as supply rises; a 1-percent increase in end-of-season stocks covered by the government's loan program, with stocks measured as a proportion of US cotton use, raises tags by 0.4 percent; and a 1 million-bale increase in China's net imports raises prices by 3.1 percent. More detailed information on the model is available at www.ers.usda. gov/publications/err80. While the USDA has not as yet published any overall price forecast, an already-existing model developed by the International Cotton Advisory Committee (ICAC) suggests a slight price rise may be in the making for the 2009-2010 marketing year. Specifically, the ICAC model, noting a 1-percent expected decline in global supplies, suggests a current year's price advance of about 5 percent. But that would still leave tags well under recent peaks.
Download Current US Textile And Economic Indicators.