In September, despite a 0.8% drop in consumer spending on apparel, the U.S. apparel CPI rose 0.6%, near the top of the epidemic. Us consumer confidence has fallen, pointing to the possibility of cautious spending ahead. The US Labour market is performing strongly, with 254,000 jobs added in September. Wage growth is picking up and global markets are upbeat.
According to Cotton Inc, the consumer price index for apparel rose 0.6 per cent in September on both a month-on-month and year-on-year basis. This brings clothing prices close to their highest level since the COVID-19 pandemic, with prices only slightly higher in April 2024. Prices are now 6.4% higher than the 2019 average. Despite rising prices, consumer spending on clothing fell 0.8% in August, but was still up 1.8% from a year earlier.
The Conference Board's consumer confidence index fell sharply in September, dropping 6.9 points to 98.7. This reflects the levels seen in April and June and remains in the 95-115 range that has persisted since August 2021. The continued decline in U.S. consumer confidence could signal more cautious spending in the months ahead.
In a major policy shift, the U.S. Federal Reserve cut interest rates by half a percentage point last month, ending an aggressive rate hike cycle that began in March 2022. Despite the cuts, interest rates remain well above pre-pandemic levels, suggesting the central bank is easing pressure but not yet stimulating the economy. At the same time, China has implemented its own economic stimulus measures, lowering interest rates and easing mortgage restrictions to support its flagging economy and housing sector, Cotton Incorporated said in its "October 2024 U.S. Macroeconomic Indicators and Cotton Supply Chain Execution Cotton Update."
In August, overall U.S. consumer spending rose 0.2% month-on-month and 2.9% year-over-year. While spending on clothing fell slightly in August, earlier months such as June saw strong growth, with clothing purchases up 4.2%.
The US Labour market performed strongly in September, adding 254,000 jobs, marking the highest monthly increase since March. That's well above the six-month average of 176,000 new jobs a month. Revisions to estimates of job growth in July and August were also positive, with 55,000 added in July and 17,000 in August. The unemployment rate fell slightly, from 4.2 percent to 4.1 percent.
After peaking at 5.9% in March 2022, wage growth in the US has slowed, stabilising at 3.4% in July 2024. However, there has been a slight pick-up in recent months, with wage growth hitting 3.9% in August and 4.0% in September, suggesting that wage pressures may be gradually returning to the economy.
Policy changes in the United States and China appear to favor economic growth and demand for commodities, including cotton products. In addition, Europe is showing signs of recovery from last year's recession, which provides more optimism for global markets going into the final quarter of 2024.
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