Recently, the International Textile Federation (ITMF) conducted its 13th COVID-19 survey on more than 220 textile companies around the world. The main issues include business conditions, business expectations, order receipts, order backlogs, and production capacity utilization. Other issues include key concerns and whether and to what extent recent cost increases can be passed on.
In all regions and all industry chain links, the business situation in March 2022 is still in the positive range, and the gap between good and bad business conditions is +13 percentage points. However, this is significantly lower than the +26 percentage points in November 2021 and the +18 percentage points in January 2022. A relatively large number of companies (43%) consider their situation satisfactory, indicating that demand remains strong despite the many challenges companies face on the supply side, such as delivery delays and rising production costs.
For business expectations in the next six months, the global textile value chain remains optimistic, but its foundation is much weaker. Since September 2021, the gap between more and less favorable expectations has fallen from +32 percentage points to +7 percentage points. This clearly shows that the textile value chain passed the peak of a strong business cycle in the fourth quarter of 2021. Whether we see broader economic growth in the future depends largely on whether disrupted global supply chains rebalance and how the Russia-Ukraine war plays out in the future.
It can be seen from different regions that the business conditions (good and bad offset) are positive in all regions except East Asia and Africa, which are negative. On the other hand, expectations vary widely. Firms in North America, South America and Africa expect business to be more favorable, while in all other regions the balance between more favorable and less favorable is negative.
As for the different industrial chain links, the downstream sector – weaving/weaving, finishing/printing and dyeing, clothing and home textile manufacturers, is usually larger than the upstream sector – fiber manufacturers, spinning and textile machinery manufacturers is more of a struggle, especially when it comes to passing on the costs of growth.
Order intake has fallen from a high level of +38 percentage points in November 2021 to +12 percentage points in March 2022, indicating declining business conditions. Likewise, order intake expectations for March 2022 have also declined from +34 percentage points in January to +22 percentage points in March 2022.
Since July 2021, the order backlog has increased from 2.3 months to 3.1 months. The forecast for the order backlog remains at 2.9 months, unchanged from the previous survey. Capacity utilization remains at around 80%. Market expectations for capacity utilization have not changed, given ongoing supply chain bottlenecks.
The rising costs of raw materials, energy and transportation are major concerns for the company. Weak demand is another concern, but not dominant (yet). The entire supply chain can only pass on an average of 40% of the increased costs.
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