June brought a modest recovery for China's textile professional markets. According to the China National Textile and Apparel Council's circulation monitoring, the manager sentiment index rose to 49.78, while the merchant sentiment index broke through the 50 boom-or-bust line to reach 50.07. However, a closer look at sub-indices reveals that the market-level recovery has not fully translated into merchant profitability, with the gap between prices and costs widening.
Market Operations Improve Across the Board
From the manager perspective, five out of six sub-indices rose month-on-month. Core operational indicators—logistics dispatch volume, foot traffic, and store opening rates—all improved, rising by 0.64, 0.64, and 0.32 percentage points respectively. Notably, the e-commerce sales index climbed to 51.61, up 0.64 points, indicating deepening online-offline integration within professional markets.
The rental index edged up 0.33 points to 50.65, suggesting cautious optimism among property managers about the business outlook. However, the total business volume index remained flat at 49.03, indicating that overall transaction scale has not yet expanded significantly. The market is still in a phase where foot traffic is recovering but transaction volumes have not followed suit.
Merchant Profits and Selling Prices Under Dual Pressure
In contrast to improving market operations, merchant profitability remains grim. In June, the average selling price index stood at 49.30, down 0.22 points month-on-month. The profitability index was 49.86, up 0.89 points from May but below the 50 threshold for the second consecutive month. This means more than half of surveyed merchants were either loss-making or barely profitable.
The sales volume index rebounded to 50.14, up 1.03 points, but the pattern of "higher volume, lower prices" persisted. Industry data shows that 18.88% of merchants saw selling prices decline, an increase of 12.03 percentage points from the previous month; 19.58% reported reduced profits, up 8.62 points. This reflects heightened price sensitivity in the end-consumer market, forcing merchants to trade volume for price.
Costs and Inventories: Pressure Eases but Risks Remain
On the cost side, marginal improvements appeared. The comprehensive cost index was 50.63, down 0.19 points from May but still above 50, indicating that cost pressure is easing. However, 6.99% of merchants reported increased operating costs, a sharp rise of 6.99 points from the previous month, suggesting some are facing higher raw material or labor costs.
The inventory index was exactly 50.00, up 0.21 points, right at the breakeven point. The share of merchants reducing inventories rose to 10.49%, up 8.44 points from May, indicating some success in destocking. Overall inventory levels remain neutral, and attention should be paid to inventory changes ahead of the autumn-winter stocking season.
E-commerce as a Stabilizer
E-commerce sales were the only "double rise" highlight in June's sentiment data. Both the manager e-commerce sales index and the merchant e-commerce sales index recovered to above 50, at 51.61 and 50.49 respectively. 22.58% of professional markets reported increased e-commerce sales, up 6.45 points from May; 9.79% of merchants saw e-commerce sales rise, up 8.42 points.
For traditional wholesale merchants, e-commerce has shifted from an "optional" to a "must-have" channel. Especially as offline foot traffic has not fully recovered, online channels have partially offset the decline in physical sales. This trend means that for buyers, it is now more important to check merchants' online inventory and price transparency when sourcing from professional markets.
Forward-Looking Indicators Send Positive Signals
Despite a mixed bag of June data, forward-looking indicators released optimism. Managers' sentiment forecast for July was 50.32, and their business environment forecast was 50.97; merchants' sentiment forecast for July was 50.84, and their business environment forecast was also 50.84. All four leading indicators were above the 50 threshold, showing cautious optimism among industry players about the short-term outlook.
This confidence likely stems from two fundamental factors: the release of summer apparel replacement demand, and the start of preparation for the traditional second-half export peak season. However, it is worth noting that the manager sentiment forecast dropped by 2.91 points month-on-month, indicating that market management still has reservations about the sustainability of the recovery.