June Textile Market Sentiment Slightly Up: Merchant Pressure Mounts, E-commerce Becomes Key Breakthrough

The June 2026 textile and apparel professional market report presents a mixed picture. The manager sentiment index edged up 0.43 points to 49.78, while the merchant sentiment index crossed the 50-point threshold to 50.07. However, beneath this modest improvement lies a tightening squeeze on merchant profitability.

Market Recovery vs. Merchant Strain

Foot traffic and store opening rates—key indicators of market vitality—rose 0.64 and 0.32 points respectively month-on-month, alongside a pickup in logistics volumes. This suggests a recovery in physical retail activity. Yet rental indices barely moved, with 93.55% of merchants reporting unchanged rents, signaling volume-driven rather than price-driven recovery.

Merchant-level data reveals stark divergence. The sales volume index improved to 50.14, indicating better turnover, but the profitability index languished at 49.86, and the average selling price index dropped to 49.30—both below the boom-bust line. This points to a 'volume for price' strategy: merchants are selling more but earning less. Notably, 19.58% of merchants saw profits decline (up 8.62 percentage points), and 18.88% were forced to cut prices (up 12.03 percentage points).

Cost-Inventory Squeeze

Cost pressures are building. The comprehensive cost index fell to 50.63, still above 50 but trending downward, indicating rising cost burdens. Some 6.99% of merchants reported higher operating costs, versus zero in the prior month. Meanwhile, the inventory index rose to 50.00, with more merchants reducing stockpiles. This paints a classic dilemma: merchants cut prices to clear inventory and maintain sales, but input costs—raw materials, labor—do not decline in tandem, squeezing margins from both ends.

For upstream suppliers like fabric and yarn mills, this means downstream buyers will be more price-sensitive, favoring smaller, high-frequency orders to mitigate inventory risk.

E-commerce: The Bright Spot

The e-commerce sales indices were the only metrics to both rise and remain firmly above 50. The manager e-commerce index hit 51.61, and the merchant counterpart reached 50.49, with the share of merchants reporting higher online sales jumping 8.42 percentage points. This confirms a structural shift: online channels are no longer supplementary but central to growth.

For wholesalers in industrial clusters like Keqiao and Shengze, this underscores the urgency of investing in live-streaming, mini-programs, and digital tools. Relying solely on foot traffic will become increasingly unsustainable as rent and labor costs rise.

Outlook: Cautious Optimism

Both managers and merchants hold forward-looking indices above 50, signaling confidence in the July season. Yet a divergence is emerging: the manager future index dropped 2.91 points from the current reading, while the merchant future index rose 0.70 points. Managers may be factoring in macroeconomic uncertainty, while merchants are buoyed by June's sales uptick—a gap worth monitoring.

Practical Recommendations

For Buyers - Capitalize on the price-cutting window to secure cost-effective staple fabrics and yarns, but verify color consistency and quality across batches. - Prioritize suppliers with established e-commerce channels; they typically have better inventory management and lower default risk. - Break orders into smaller lots to hedge against upstream cost volatility and avoid overstocking.

For Exporters - Monitor RMB exchange rate fluctuations closely, as domestic price weakness makes pricing power in export contracts even more critical. - Offer 'light customization' services with low minimum order quantities and fast turnaround to cater to small and medium buyers in emerging markets like Southeast Asia and South Asia. - Leverage e-commerce data from professional markets to guide product development, translating online best-sellers into export recommendations.