The sentiment index for China's textile and apparel professional markets finally halted its two-month decline in June 2026, but the rebound was marginal and structurally uneven. The manager sentiment index stood at 49.78, while the merchant index reached 50.07. Although both improved from May, the manager index remains below the 50-point threshold, indicating the market has not yet exited the cautious zone.
Market Operations: Flat Volume, Partial Recovery
Among the sub-indices for managers, the total business volume index remained unchanged from the previous month. Logistics dispatch and foot traffic indices both rose by 0.64 percentage points, and the store opening rate index edged up 0.32 points. Over 77% of professional markets reported flat total business volume and logistics dispatch, suggesting no directional breakthrough—only a mild seasonal correction. Notably, the rent index has remained above 50 for three consecutive months, reflecting stable landlord pricing power, but also implying fixed costs remain rigid for merchants.
Signals from the merchant side were more complex. The sales volume index rebounded to 50.14, up 1.03 points from May, but the average selling price index fell 0.22 points to 49.30. The profitability index, though recovering 0.89 points from a low base, still sits below 50. This suggests merchants are "trading volume for price," maintaining cash flow through discounts without improving margins. Nearly 20% of merchants reported declining sales and profits, a proportion significantly higher than in May.
Costs and Inventory: Pressure Transmitted Midstream
In June, the comprehensive cost index for merchants fell 0.19 points to 50.63. While still above 50, the trend warrants attention. A more direct warning sign: 6.99% of merchants reported rising operational costs, a near-doubling from May's 0%. Meanwhile, the inventory index rose 0.21 points, and the share of merchants reducing inventory jumped from 2.05% to 10.49%, indicating accelerated destocking.
Taken together, the dual squeeze from upstream raw material volatility and downstream price pressure is cascading to midstream merchants in specialized markets. Rising costs, falling selling prices, and faster destocking paint a classic picture of structural adjustment: the market is weeding out intermediaries unable to pass on costs.
E-commerce: The Only Clear Growth Engine
Amid the overall sluggishness, e-commerce sales stood out. The manager e-commerce index reached 51.61, up 0.64 points from May; the merchant e-commerce index hit 50.49, up 0.35 points. 22.58% of market managers reported increased online sales, up 6.45 percentage points from May, while the share of merchants with rising online sales jumped from 1.37% to 9.79%.
These figures reflect a continued channel shift. Merchants in traditional wholesale markets are accelerating the transition from physical booths to online platforms. For fabric and accessory suppliers reliant on foot traffic, this signals a need to reassess channel strategies. With e-commerce indices above 50 for two consecutive months, this is no short-term fluctuation but a structural trend.
Outlook: Divergent Confidence Creates Windows
Managers and merchants show markedly different expectations for July. The manager forward-looking index fell 2.91 points to 50.32, while the merchant forward-looking index rose 0.70 points to 50.84. This pattern—cautious managers, optimistic merchants—often appears near market bottoms. Managers are more attuned to systemic pressures on rents and foot traffic, while frontline merchants are more sensitive to short-term order rebounds.
All four forward-looking indices remain above 50, suggesting cautious optimism for July. However, given June's actual data, this optimism appears more a rebound from low base effects than a genuine expansion in demand.