49.6% — that is the reading from China's cotton textile sentiment index for August 2026, down another 0.1 percentage point month on month and still below the 50 threshold. In the same month, the global manufacturing PMI rose to 52.3% and China's manufacturing PMI recovered to 49.8%. The macro warmth upstream contrasts sharply with the chill in cotton textiles. The problem is not that demand has vanished, but that the cost pass-through channel to downstream buyers is blocked.
Why macro recovery has not reached cotton spinning
Global manufacturing has now stayed above 50.0 for 13 consecutive months, reaching 52.3% in August, suggesting an improving external demand environment. Among the 21 industries surveyed for China's manufacturing PMI, 16 reported month-on-month gains, pointing to a broader recovery. Cotton textiles, however, did not benefit in step, indicating that this recovery is unevenly distributed. As a traditional labor-intensive segment, textile and apparel is repairing orders more slowly than equipment, electronics and other sectors.
Among the seven sub-indices, only raw material procurement, product sales and business operation stood above the threshold, while the other four remained below 50. The raw material procurement index came in at 51.1%, up 0.9 percentage point, and the product sales index at 50.6%, up 0.4 percentage point. These gains largely reflect price factors rather than volume expansion. For mills, higher procurement does not necessarily mean better profits.
Raw material inflation squeezes fabric makers first
Raw material markets rose almost across the board in August. The monthly average spot price of domestic grade-3128 cotton reached 17,680 yuan per tonne, up 1.95% month on month. The monthly average price of 1.4D direct-spun polyester staple fiber was 7,662 yuan per tonne, up 3.40%, while mainstream viscose fiber averaged 14,241 yuan per tonne, up 0.15%. The Zhengzhou cotton futures main contract CF2701 touched a high of 17,345 yuan per tonne during the month. Polyester staple fiber climbed from around 7,500 yuan to about 8,200 yuan per tonne, and major viscose producers raised quotes to 14,550 yuan per tonne.
Rising costs directly dampened downstream buying interest. Although downstream orders began to pick up in mid-August, acceptance of high-priced raw materials remained low, with purchases limited to small, urgent lots. The divergence on the production side deserves attention: the yarn output index stood at 51.0%, up 0.3 percentage point, while the grey fabric output index was only 48.0%, down 2.9 percentage points. Yarn strength versus fabric weakness means the midstream is still building inventory or waiting on the sidelines, and weaving mills are reluctant to raise operating rates. The transmission along the supply chain is not smooth.
Inventory data also leans bearish. The raw material inventory index was 48.7%, down 0.2 percentage point, and the product inventory index 49.3%, down 0.9 percentage point, with the fabric inventory sub-index down 2.5 percentage points. In this index system, readings below 50 mean inventories are rising, suggesting that mills are not finding it easy to clear finished goods.
Weak confidence is the biggest variable for peak season
The business operation index came in at 50.1%, barely above the threshold but down 0.7 percentage point month on month. The revenue index was 49.8%, down a sharp 2.8 percentage points, while the profit index was 50.3%, up 1.3 percentage points. Shrinking revenue with slightly higher profit suggests companies are relying on cost cuts or product mix adjustments rather than a genuine demand recovery.
The business confidence index stood at 46.7%. Although up 0.9 percentage point, it remains the weakest component. With marginal market improvement falling short of expectations and high uncertainty ahead, companies are broadly cautious. For buyers, this means suppliers may be more conservative on quotes and delivery times. For mills, running at full capacity carries real risk. For exporters, order confirmation cycles during peak season may lengthen.