Economic operation analysis of knitting industry in the first half of 2022

Edited by Zhao Xinhua

Since 2022,influenced by factors such as a more complex international situation and the recurrence of the pandemic in China,China’s macroeconomic operation pressure has increased,the growth rate of industrial pro—duction and economic efficiency has slowed down,and the decline in manufacturing has been more obvious.The do—mestic market has been significantly affected by the pan—demic,with overall reduction in sales and decreased will—ingness to consume.In addition,China’s knitting industry actively responds to strengthen the adjustment,which has maintained the stability and development of the industry.

Industry operation

Growth in scale continued to slow down

In the first half of this year,the overall operating in—come of enterprises above designated size of knitting industry in China achieved growth,but the growth rate fell significantly,and the growth of the industry scale showed a slowing trend.

From January to June,the operating revenue of enter—prises in the knitting industry increased by 6.35% year—on—year,0.61 percentage points higher than that of the textile industry.The growth rate was 6.95 percentage points lower than that of the previous year,and 5.91 percent—age points lower than that of the first quarter of this year.Among them,the operating income of knitting fabric enter—prises increased by 9.23% year—on—year,and the operating income of knitting clothing enterprises above designated size increased by 4.66% year—on—year,which decreased by 10.39 percentage points and 5.18 percentage points respectively compared with last year,and 8.41 percentage points and 4.62 percentage points respectively compared with the first quarter of this year,according to the National Bureau of Statistics.

Output growth slowed down significantly,and showed negative growth in June.From January to June this year,the knitted clothing output of enterprises above designated size decreased by 0.56%,the growth rate was 11.42 percentage points lower than that of last year,and 4.33 percentage points lower than that of the first quarter of this year.

Production costs are still high

So far this year,industry costs are high,operating costs have been higher than the growth of operating revenue.

Data from the National Bureau of Statistics shows that from January to June,the operating cost of enterprises above designated size in the knitting industry increased by 7.56% year—on—year,the growth rate was 1.21 percentage points higher than the operating revenue.Among them,the operating cost of knitted fabric enterprises above designat—ed size increased by 9.89% year—on—year,0.66 percentage points higher than the operating revenue;the operating cost of knitted clothing enterprises above designated size increased by 6.16% year—on—year,1.5 percentage points higher than the operating revenue.

Costs are growing rapidly,and operating costs account for an excessively high proportion of operating income,which seri—ously compresses the profit margins of enterprises.From Janu—ary to June,the cost per 100 yuan of operating income of knitting enterprises above designated size increased by 0.99 yuan over the same period of the previous year,which was equivalent to a drop of nearly 1 percentage point in profit margin.

In the first half of this year,the national PPI (Producer price Index) rose by 7.7%.Among them,the price of chemical fiber manufacturing rose by 7.9% year—on—year,while the price of textile and clothing industry rose by only 0.9%,far lower than the price of chemical fiber.In addition,from January to June,the pur—chase prices of industrial producers rose by 10.4%,among which the price of textile raw materials rose by 8.6%,significantly higher than the ex—factory price of textiles and garments.

In addition,according to the analysis of China Textile Econ—omy Research Center,since the beginning of this year,the high price of raw materials in the textile industry,the cost is difficult to pass along the industrial chain in the weak demand market environment,seriously squeezing the profit space of enterprises.Oil,natural gas and other international energy prices fluctuate high,dyes and chemicals rose by nearly 30% year—on—year,and steam prices in Jiangsu and Zhejiang continued to rise month—on—month from March to May.in the case of weak market demand,cost pressure is difficult to pass down,corporate profit—ability generally deteriorated.Although the cotton raw material prices from June began to slide back,but in the first half of this year raw material prices are still at the highest in recent years.

Continuous improvement of operational benefits

The increase in cost seriously affects the profitability of the industry.Profit declined significantly in the first quarter,and be—gan to rise to a certain extent in the second quarter,reflecting the determination and action of enterprises in the industry.

From January to June,the total profits of enterprises above designated size in the knitting industry rose 13.31% compared with the same period last year;among them,the total profit of knitted fabric rose 1.69% year—on—year,and knit—ted clothing rose 20.20% year—on—year.The profit rate of enterprises above designated size in the knitting industry from January to June was 4.24%,up 0.26 percentage points year—on—year and 0.97 percentage points higher than that in the first quarter of this year.

Since the beginning of this year,the enterprise has actively responded to external changes,strengthened management and improved efficiency.From January to June,the three expenses of enterprises above designated size in the knitting industry accounted for 7.09%,down 0.82 percentage points compared with the same period last year.Meanwhile,with the continuous progress of the resumption of work and production of textile enterprises across the country,the percentage of loss—making en—terprises above designated size in the knitting industry has also improved.From January to June,the percentage of loss—making enterprises above designated size in the knitting industry was 26.80%,down 3.66 percentage points from the first quarter.

Exports maintained rapid growth

Since the beginning of this year,the export of textile clothing and knitwear products has been increasing steadi—ly.In the first half of this year,China’s textile and garment exports reached $156.49 billion,up 11.7% year—on—year.Among them,textile exports were $76.32 billion,up 11.3%year—on—year;garment exports reached $80.17 billion,up 12.0% year—on—year.

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From January to June,the export of knitted products reached $54.343 billion,up 21.37% year—on—year.Among them,knitted fabrics were exported to $12.618 billion,up 18.8% year—on—year;knitwear exports reached $41.725 billion,up 22.1% year—on—year.

In terms of the main export markets,China’s exports to the United States,ASEAN and the European Union are still maintaining a high growth rate.From January to June,the export of knitted products to the U.S.,Europe,Japan and ASEAN markets totaled $32.752 billion,up 27.42%compared with the same period last year;exports to other markets totaled $21.591 billion,up 13.22% year—on—year.

Weak domestic market demand

Affected by the pandemic,the domestic consump—tion of textile and apparel products declined again.Due to the recurrence of the pandemic in many places,the limited flow of people and logistics had a great impact on both on—line and offline sales.

In the first half of this year,the total retail sales of con—sumer goods was 21.04 trillion yuan,down 0.7% year—on—year,and the growth rate was 4 percentage points lower than that in the first quarter of this year.The retail sales of clothing,shoes,hats,and knitted textiles by units above designated size totaled 628.2 billion yuan,down 6.5%year—on—year and 5.6 percentage points lower than that in the first quarter.Among the online retail sales of physical goods,the clothing category grew by 2.4% year—on—year,1.5 percentage points higher than the first quarter.Since April this year,China’s consumer confidence index has fallen below 90 points,which is the first time in the past five years that it has fallen below the threshold.This further shows that domestic consumer confidence is currently in—sufficient,market demand is weak,and economic recoveryis slowing down,it is also the main pressure for the reduc—tion of orders for small and medium—sized enterprises in the knitting industry,according to eastmoney.

Table 1 Operation of enterprises above designated size in the knitting industry in 2022

Industry forecast for the second half of the year

Although the textile enterprises are under pressure,we still need to see that the domestic economic funda—mentals are good,and the effect of policies and measures will gradually appear.We should firmly develop confi—dence and make full use of the window period of policies and measures.The international economic and market situation will continue to undergo complex changes.Since the United States’ “Uyghur Forced Labor Prevention Act”took effect on June 21 this year,Chinese textile and for—eign trade enterprises may face certain pressure.Accord—ing to the estimation of the China Chamber of Commerce for Import and Export of Textiles,it is expected that in the second half of this year,the shift of orders for textile andapparel in China may accelerate,and the shift of orders for cotton textiles will be around $2 billion,mainly to India and other countries.Enterprises should calm down and actively respond.

As the pandemic prevention and control situation in China continues to improve and the package of poli—cies and measures to stabilize the economy accelerate to take effect,the National Bureau of Statistics expects that China’s overall economic recovery will accelerate in the second half of the year.China’s manufacturing purchas—ing managers’ index rose into expansionary territory to 50.2% in June,reflecting an improvement in overall senti—ment in the sector.The production index and the new or—der index were 52.8% and 50.4% respectively,both back above the critical point,up 3.1 and 2.2 percentage points from the previous month,indicating that the market de—mand for manufacturing has improved and production is recovering faster.

In order to improve the consumer confidence in the second half of the year,enhance the domestic demand,increase the order volume,the government and enterprises should actively take effective measures.On the one hand,to introduce a series of policies conducive to the healthy opera—tion and development of the industry;on the other hand,to seize the favorable opportunity,positive adjustment,pro—mote industry stability and promotion.