The latest economic survey by EURATEX has confirmed that the European Textiles and Clothing (T&C) industry is coming out of the COVID-19 crisis, but will face new challenges ahead. The textile activity has surpassed its pre-pandemic level from the fourth quarter of 2019 by 3.6 per cent. The clothing sector remains 11.5 per cent low, but continues to improve.

The textile turnover has increased by 3.3 per cent in the second quarter of 2021, after slight contraction in the first quarter of 2021. Similarly, the business activity in the clothing sector has also expanded by 7 per cent in the second quarter of 2021, after increasing 1 per cent in the previous quarter. This recovery may, however, be disrupted by the current supply chain and energy problems, EURATEX said in a press release.

In the second quarter of 2021, the EU-27 trade balance for T&C improved, resulting mostly from an increase of export sales across third markets and a drop of textile imports. T&C Extra-EU exports boomed by 49 per cent as compared with the same quarter of the previous year. T&C Extra-EU imports went down by 26 per cent as compared with the same quarter of the previous year, following a decrease of imports from some main supplier countries. EU imports from China and the UK collapsed due to a combination of Brexit and weaker demand in Europe.

During the second quarter of 2021, job creation was slowly stabilising in the textile industry, while employment in the clothing sector continued to be affected by lower levels of production activity in industry during the first part of the year. When compared to its pre-pandemic level in Q4 2019, EU employment in the second quarter of 2021 was still 4.4 per cent down in textiles and 11.8 per cent down in clothing.

However, this fragile recovery is hampered by higher shipping costs and prices’ increase in raw materials and energy. The cost of energy, in particular gas, has increased more than 3 times since the beginning of this year. Since the announcement of the EU’s ‘Fit for 55’ package, we have seen CO2 prices rising above €60. This inevitably has an impact on the industry’s competitiveness, especially in a global context. The future recovery is also threatened by some factors limiting production, such as shortage of labour force and equipment, which are putting additional pressure on T&C industries.

“Our companies have shown great resilience during the pandemic, and their latest export performance is an encouraging sign of recovery. This recovery may however be disrupted by the current supply chain and energy problems. Once again, recent developments show that this transition towards more sustainable production can only work if organised in a global context, avoiding carbon leakage and with an effective level playing field. This must be considered in the upcoming EU Textiles Strategy,” said EURATEX director general Dirk Vantyghem.

Manali bhanushali
Author: Manali bhanushali

Manali Bhanushali