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Textile Manufacturing Growth up 4.4% in Key Sourcing Regions

Manufacturing the world over may still be battling to regain momentum following the financial crisis in 2009 but global output growth for 2015 will likely hover around 3.5%.

And an improving American economy, where lower oil prices helped cut production costs made U.S. products more competitive on the market, according to the United Nations Industrial Development Organization’s (UNIDO) quarterly report.

Textile manufacturing grew 4.4% in developing and emerging countries (including Africa, China, Southeast Asia and Central America, among others), outpacing the 3 percent overall global manufacturing output for textiles, while industrialized economies (like the U.S. and EU) saw a 1.4% decline in output growth compared to the previous year.

Production of textiles dipped in Brazil, South Africa and Turkey, but increased in Egypt Mexico and Poland.

“Following the global financial crisis, developing countries have been the main engine of global manufacturing growth, but the pace of growth in this country group has decelerated over the past few years,” the report noted. “Developing countries continue to face difficulties as the U.S. dollar appreciation significantly increases these countries’ borrowing costs, at a time when external financial conditions are becoming tighter.”

Apparel production grew 4.3% among developing and emerging countries, with Egypt and India posting the highest rates of growth and the Czech Republic, Italy and Malaysia also clocking positive numbers.

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Manufacturing output in Latin America—where more brands and retailers are turning for near-shoring to cut production lead times—is expected to decline at a rate of 1.7% for the year as the region is highly influenced by Brazil’s struggling economy.

Global output growth slowed as a whole in the second quarter of the year, though, with major currency shifts roiling markets, oil prices dipping and China’s continued slowdown weighing on world markets. Output increased just 2.5% in the quarter, down from 2.9% the previous quarter.

“In the industrialized world, North American and European manufacturers registered modest growth rates, while negative growth was observed in East Asia. Developing and emerging industrial economies also registered a lower growth rate as manufacturing output in China continued to slow down and the major Latin American economies struggled with severe economic challenges,” the report noted.

Weak growth and low inflation in the EU and Japan, according to the UNIDO report, are curbing the positive effects of the improving U.S. economy. Manufacturing output growth in industrialized countries fell to 0.7% in the second quarter from 1.2% in the first. In the U.S. however, output growth rose 2.3%.

China’s growth was roughly 7.1%, it’s lowest in more than a decade, which the United Nations owed to soft demand in domestic and foreign markets and a decline in investment. The slowing of the Asian nation’s manufacturing market is affecting all developing and emerging markets as manufactured exports to China have dipped considerably in the past year too.

“The reported growth figure for China in the second quarter of 2015, albeit sizeable, is comparably lower in comparison to past years despite the government’s attempts of a policy intervention,” the report noted.