Retail prices for apparel in the US showed stability in August, with a marginal month-over-month change of -0.04 percent. However, year-over-year, the consumer price index (CPI) for garments increased by +3.9 percent, marking the 29th consecutive month of rising prices, as per Cotton Incorporated.
This upward trend partly reflects reflation efforts following an -8.7 percent drop at the onset of the pandemic, surpassing pre-COVID levels with a +6.1 percent increase compared to 2019 averages. The CPI values in August and July reached their highest point since 2001.
In terms of imports, the cost per square-meter equivalent (SME) of cotton-dominant apparel in the US saw a significant month-over-month decline in August, dropping by -3.9 percent from $3.89/SME to $3.74/SME. This marks the lowest average cost since May 2022, with import volumes remaining depressed at approximately -20 percent lower than pre-pandemic levels, Cotton Inc. said in US Macroeconomic Indicators & the Cotton Supply Chain – October 2023.
The Conference Board’s Index of Consumer Confidence in the US declined for the second consecutive month, dropping -5.3 points in August and an additional -5.7 points in September. Despite recent decreases, the current index value stands at 103.0, within the range of 100 to 115 that has held since August 2022. The long-term average for the index remains near 93.0 since 1970.
Inflation-adjusted consumer spending in the US remained flat in August (+0.01 percent). Year-over-year, overall spending increased by +2.3 percent, while spending on apparel saw a modest month-over-month rise of +0.4 percent but a year-over-year decline of -0.7 percent. This marks the sixth consecutive month of declining clothing spending compared to the previous year.
In late September, Federal Reserve officials indicated a longer period of higher interest rates, departing from earlier expectations of rate reductions following initial increases to control inflation. Market expectations regarding interest rates, as reflected in the Treasury market, show rates on 10-year securities trading near or below 2-year rates since the Fed’s rate hikes began in March 2022. This inversion typically precedes economic downturns, reflecting the market’s anticipation of a recession.
However, recent data shows a narrowing gap between 10-year and 2-year rates, from -1.1 percentage points in June to -0.3 points now, suggesting a reduced risk of recession but also a lower likelihood of a growth-boosting interest rate reduction. Geopolitical developments may further influence global macro conditions.
In the US, the job market remained stable as an estimated +336,000 jobs were added in September.
Positive revisions to previous months’ figures increased job creation numbers for July by +79,000 to +236,000 and for August by +40,000 to +227,000. The twelve-month average of job creation stands at +266,000, equal to the three-month average, indicating steady job growth.
The unemployment rate in the US held steady at 3.8 percent, a level rarely sustained in recent history, with only two other periods since World War II having such low jobless rates.
Average hourly earnings growth in the US was +4.1 percent year-over-year in September, reflecting a slight deceleration compared to the higher rates observed earlier in 2023 but still well above pre-pandemic levels.