US Sourcing Shift to Vietnam Continues in August

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U.S. apparel imports fell in August for the third consecutive month, moving in the opposite direction of overall goods and services imports. However the shift in sourcing from China to Vietnam continued despite the failure of Trans-Pacific Partnership.

Total apparel imports dropped by 1.4% in the month to $9.3 billion on a CIF basis,, according to data released late last week by the U.S. Census Bureau, while total U.S. goods and services imports increased by 3.8%, to $203.5 billion.

On a 12-month smoothed basis, apparel imports fell by 2.2%, capping five months of increases, an indication that apparel imports have bottomed out and stabilized.

A healthy job market, low inflation and strong dollar have failed to compensate for persistent apparel deflation in an oversupplied retail market and declining consumer interest in apparel compared to other expenditure categories.

Apparel exports rose by 2.6% to $506 million. Total U.S. goods and services exports increased by 5.1%.

On a year-to-date basis, apparel imports have fallen compared to last year, according to OTEXA, the International Trade Administration’s Office of Textiles and Apparel.

Total apparel imports declined by 1.9% on an MFA basis in the January to August period, to just over $53 billion from $54 billion in the same period in 2016.

Among the top 10 U.S. apparel trading partners, only Vietnam, India, Nicaragua and Mexico have grown their apparel shipments to the U.S.

On a square meter equivalent (SME) basis, imports have edged up by 0.9% this year, continuing the overall tendency toward cheaper goods, despite upward pressure on labor and raw material costs. The average cost per unit of an imported garment fell by 2.8% in the first eight months of the year.

The average cost per SME increased by 11.4% from Mexico, and rose 3.7% for El Salvador, but dropped for all other key trading partners, with the cost per SME from China suffering the biggest drop, down by 6.4%.

Vietnam’s apparel shipments to the U.S. continued to grow, increasing by 5.6% to $7.7 billion in the period, gaining over a percentage of U.S. apparel import market share so far this year, to 14.4%.

Mexico’s apparel exports to the U.S. increased by 5.3% to $2.3 billion, driven by near-sourcing efforts on the part of many U.S. brands. Mexico’s share of U.S. apparel imports increased by 0.3 percentage points.

China has lost the most share of U.S. apparel imports in the period, down one percentage point to 32.8%.

Bangladesh also lost share, with apparel shipments to the U.S. down by 5.9% year-to-date, to 5.6% of total U.S. apparel imports.

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