Slight Recovery in Specialized Market Sentiment Index, Profit Pressure Persists for Merchants

In June 2026, the sentiment indices for China's textile and apparel specialized markets showed subtle divergence. According to the latest monitoring data from the China National Textile and Apparel Council's Circulation Branch, the manager sentiment index stood at 49.78, up 0.43 percentage points month-on-month, while the merchant sentiment index reached 50.07, up 0.34 percentage points. Although both indices are moving toward the expansion zone, the structural differences beneath the surface deserve close attention from industry practitioners—the recovery on the market management side has not fully transmitted to merchants' profit statements.

Manager vs. Merchant: Two Different Recovery Rhythms

From the manager perspective, the overall business environment index in June was 51.94. Although it declined slightly month-on-month, it remains in expansion territory. Among sub-indices, the total business volume index remained flat at 49.03, while logistics volume, foot traffic, and store opening rate indices all recovered by 0.32 to 0.64 percentage points. This set of data indicates that the physical operations of specialized markets are improving—more stores are open, foot traffic is picking up, and logistics turnover is accelerating. However, the rent index only edged up 0.33 percentage points, and 93.55% of markets reported stable rents, suggesting that the market has not yet entered a price-hiking cycle and operators are still prioritizing stability.

Merchant-side data paints a more complex picture. Although the overall merchant sentiment index crossed the 50 threshold, core profitability indicators remain under pressure. The sales volume index rebounded to 50.14, up 1.03 percentage points month-on-month, indicating an increase in shipment volumes. However, the average selling price index was only 49.30, down 0.22 percentage points, and the profitability index stood at 49.86, both below the boom-bust line. This means merchants are facing a "volume up, price down" dilemma—selling more but earning less.

Costs and Inventory: Pressure Transfer Incomplete

A noteworthy warning signal in the June data is the change on the cost side. The comprehensive cost index for merchants was 50.63, down 0.19 percentage points month-on-month, and 6.99% of merchants reported rising operating costs, a sharp increase of 6.99 percentage points from the previous month. Although the cost index remains above 50, its downward trend is clear, indicating that cost pressures are being transmitted from upstream to the circulation link. Meanwhile, the inventory index stood at 50.00, up 0.21 percentage points, and the proportion of merchants reporting reduced inventory increased by 8.44 percentage points. This suggests that destocking has achieved some results, but weak pricing power continues to constrain profit margins.

This combination of rising costs and falling prices is directly squeezing the cash flow of small and medium-sized merchants. For secondary wholesalers of fabrics and garments, the scissors gap between upstream raw material price volatility and weak end-consumer demand is eating into already thin margins.

E-commerce: The Only Certain Growth Driver

Among all sub-indices, the e-commerce sales index stands out as the only consistently positive indicator. The manager-side e-commerce sales index was 51.61, up 0.64 percentage points month-on-month; the merchant-side index was 50.49, up 0.35 percentage points. More critically, 22.58% of market managers reported an increase in e-commerce sales, up 6.45 percentage points from the previous month, and 9.79% of merchants also saw e-commerce growth, up 8.42 percentage points.

This means that while the recovery of offline foot traffic in traditional specialized markets is important, online channels have become a core tool for merchants to hedge against offline uncertainties. For fabric hubs like Keqiao and Shengze, e-commerce is not just a supplementary sales channel but a key pathway to improve inventory turnover and customer reach efficiency.

Outlook: Can Confidence Translate into Orders?

Looking at forward-looking indices, managers' expectations for July stood at 50.32, down 2.91 percentage points month-on-month but still in expansion territory. Merchants' expectations for the next period rose to 50.84, up 0.70 percentage points. Both are above the boom-bust line, indicating that market participants hold expectations for short-term improvement.

Whether this confidence can translate into actual orders depends on the strength of end-consumer demand recovery. The industry is currently in a transitional phase between the end of destocking and the start of restocking. For buyers, the June data signals a window: with merchants' selling prices low and inventory pressure easing, bargaining room may be narrowing.

For Buyers - Monitor the average selling price index, which has been below 50 for consecutive months. This remains a buyer's market, allowing for price negotiations on short- to medium-term orders. - Prioritize markets or merchants with higher e-commerce sales indices, as they typically have better inventory management and pricing flexibility. - Be cautious of potential price rebounds as July expectations rise; consider completing Q3 procurement before the end of the month.

For Foreign Trade Companies - The domestic trend of rising volumes but falling prices may spill over into export quotations. Monitor RMB exchange rate fluctuations for potential secondary profit compression. - With the cost index trending downward, request cost breakdowns from domestic suppliers to push for more transparent pricing. - Leverage e-commerce-savvy markets for small-batch, high-frequency trial orders to reduce inventory risk.