June Textile Market Sentiment Rebounds: E-commerce and Foot Traffic Drive Recovery, Cost Pressure Persists

June brought a clear signal of recovery for China's textile and apparel specialized markets. According to the latest monitoring data from the China National Textile and Apparel Council (CNTAC), the market manager sentiment index rose 0.43 points month-on-month to 49.78, while the merchant sentiment index crossed the 50 boom-bust line to 50.07, up 0.34 points. This shift indicates that market operations are slowly climbing out of May's trough, but structural divergence remains pronounced: online channels and foot traffic are the main drivers, while offline merchants' profitability and pricing power are still under pressure.

E-commerce and Foot Traffic: Dual Engines

Breaking down the sub-indices, the core drivers of June's recovery are e-commerce sales and improved foot traffic. The manager-level e-commerce sales index rose 0.64 points to 51.61, and the merchant-level e-commerce index increased 0.35 points to 50.49—both firmly above the 50 threshold. This suggests that the industry's ongoing digital transformation is yielding tangible gains, especially as small and medium-sized merchants supplement offline traffic shortfalls with livestreaming and social commerce.

Simultaneously, the foot traffic index climbed 0.64 points to 49.03, though still below 50, the decline has notably narrowed. The store opening rate index edged up 0.32 points to 49.35, indicating a slight easing of vacancy pressure. The logistics shipment volume index also recovered modestly by 0.64 points to 49.03, mirroring the business volume index (49.03, unchanged), and suggesting that market transaction activity, while not yet fully recovered, has stabilized at a low base.

Merchant Profitability Squeezed: Price-Cost Pincer

Despite the overall sentiment improvement, merchant-side business quality has not kept pace. In June, the average selling price index fell 0.22 points to 49.30, remaining below the boom-bust line for a second consecutive month. The profitability index, though up 0.89 points to 49.86, is still in contraction territory. More concerning, the comprehensive cost index fell 0.19 points to 50.63. While still above 50 (where a higher index means lower cost pressure), the decline signals that operating costs are rising marginally.

Specifically, 6.99% of merchants reported higher operating costs, a 6.99 percentage point increase from May, while the share of merchants reporting price declines jumped from 6.85% to 18.88%, a 12.03 percentage point surge. This 'rising costs, falling prices' dynamic is squeezing margins. The inventory index rose 0.21 points to 50.00, suggesting a slight easing of destocking pressure, but overall inventory remains at a neutral level without triggering significant restocking demand.

Divergent Sentiment: Managers Cautious, Merchants Optimistic

Forward-looking indices for July reveal an interesting divergence. The manager-level forward sentiment index fell 2.91 points to 50.32, and the forward business environment index dropped 1.93 points to 50.97, indicating that market administrators are cautious about the near term, possibly due to the traditional summer lull and macroeconomic uncertainties.

In contrast, the merchant forward sentiment index rose 0.70 points to 50.84, and the forward business environment index increased 0.77 points to 50.84—both above 50 and trending upward. This discrepancy may stem from merchants' stronger confidence in continued e-commerce growth and their closer alignment with end-consumer demand. Nonetheless, all four forward indices remain above 50, suggesting overall optimism for July, albeit with differing risk perceptions between managers and merchants.

Practical Recommendations

For Buyers - Leverage price negotiation opportunities from merchant cost pressure: with the selling price index in contraction, some merchants may be willing to negotiate to clear inventory; buyers can use this window to secure quality goods at favorable terms. - Prioritize suppliers with strong e-commerce capabilities: merchant e-commerce indices have risen for two consecutive months, so suppliers with stable online channels are more reliable in logistics and after-sales, making them better long-term partners.

For Factories and Export Companies - Control production costs to withstand downstream price pressure: with merchant profitability below 50, downstream buyers are more price-sensitive; factories should optimize processes or streamline supply chains to maintain competitiveness. - Manage inventory prudently: the merchant inventory index hovering around 50 suggests restocking demand has not yet materialized; factories should avoid overcapacity and consider flexible, small-batch, multi-cycle production models.