Fashion
Downside risk to near-term outlook from US govt shutdown: Treasury
Artificial intelligence (AI) could have disruptive impacts on the economy and labour markets as businesses and individuals integrate it or fail to, according to the Economy Statement for the Treasury Borrowing Advisory Committee.
US economic growth solidified in Q3 2025, with steady business investment and consumer demand, but each week of the unnecessary government shutdown is adding drag to Q4 GDP and introduces downside risk to the near-term outlook, the Economy Statement for the Treasury Borrowing Advisory Committee said.
AI could disrupt the economy and labour markets as businesses and individuals integrate it or fail to.
Yields on US Treasury notes and bills eased over Q3 2025 and labour markets stabilised in July and August, with modest employment growth consistent with that of Q2, the statement said.
Forced deportation and voluntary self-deportation of illegal immigrants has reduced labour supply, but labour demand has similarly decreased. This has kept aggregate labour markets roughly in balance.
With modest hiring but low layoff rates, firms appear to be planning for output growth via productivity improvements, a release from the treasury department said.
In just July and August, real personal consumption expenditures (PCE) were up by 2.8 per cent at an annual rate, picking up modestly from the Q2 figure.
Total payroll job growth averaged 51,000 per month during July and August, after averaging 55,000 per month during Q2 2025. The slower growth from the second to third quarters, however, partly reflected the shedding of federal government jobs—with a monthly average decrease of 12,500 in federal employment.
By contrast, private sector job creation remained steady at 58,000 jobs per month in July and August. Although this growth rate is below the roughly 100,000 jobs added per month in Q1 2025, it likely reflects the drop in population growth related to the forced and self-deportation of illegal immigrants, the release noted.
From May 2024 to July 2025, monthly unemployment rates fluctuated within a narrow range of 4 per cent and 4.2 per cent. In August, the unemployment rate ticked up to 4.3 per cent of the labour force, and the average for July and August was 4.29 per cent.
Unemployment rates in Q3 2025 remained just below the Congressional Budget Office’s 4.4-per cent estimate of the non-cyclical unemployment rate—or the rate of unemployment that is consistent with stable inflation and excludes fluctuations in aggregate demand.
Meanwhile, layoffs and discharges remained low. Private-sector layoffs and discharges accounted for just 1.3 per cent of employment in July and August, in line with the low rates that persisted during President Donald Trump’s first term before the pandemic.
Inflation remained above the target of 2 per cent in Q3 2025. As of September 2025, CPI inflation was 3 per cent on a twelve-month basis. The elevated annual growth partly reflects the strong price pressures from September 2024 to January 2025, in which headline CPI rose by 4.1 per cent at an annualised rate. From January 2025 to September 2025, CPI growth was more moderate at 2.5 per cent at an annual rate.
Monthly core CPI inflation averaged 0.3 per cent in Q3 2025. Over the twelve months through September 2025, the core inflation rate was 3 per cent. So far this year, annual core inflation has ranged between 2.8 per cent and 3.1 per cent, save for the 3.3-per cent rating realised in January from when President Trump assumed office.
Fibre2Fashion News Desk (DS)
The outlook reflects improving confidence among purchasing and supply management executives, with revenues expected to increase in 16 of 18 manufacturing industries in 2026. ISM noted that after moderate growth in the first half of the year, manufacturing activity is projected to accelerate in the second half, ISM said in a press release.
In manufacturing, 56 per cent of survey respondents expect revenues to be higher in 2026 than in 2025, with overall manufacturing revenues forecast to rise by a net 4.4 per cent, compared with a 2.5 per cent increase reported for 2025. Despite manufacturing remaining in contraction for the ninth consecutive month in November, executives remain optimistic about a turnaround as the year progresses.
Manufacturing capital expenditures in the US are forecast to rise 3 per cent in 2026 after a 3.5 per cent increase in 2025, while manufacturing employment is expected to grow 0.4 percentage point, according to ISM.
Revenues are projected to increase in most industries, with overall manufacturing revenues up 4.4 per cent.
A stronger second-half momentum supports cautious optimism for 2026.
Manufacturers reported operating at 82.4 per cent of normal capacity, up from 79.2 per cent in May 2025. Production capacity increased 2.8 per cent in 2025 and is expected to expand more sharply by 5.2 per cent in 2026, supported by additional hiring, investment in plant and equipment, longer operating hours, and the replacement of older machinery with more advanced technology.
While 2025 capital expenditures exceeded earlier expectations, rising 3.5 per cent on average, manufacturers anticipate a further 3 per cent increase in 2026. Apparel, transportation equipment, and machinery are among the industries forecasting higher capital outlays next year.
Prices paid for raw materials rose 5.4 per cent in 2025 and are forecast to increase by a net 4.4 per cent in 2026. Labour and benefit costs are expected to rise 2.5 per cent, reflecting continued wage pressures amid a tightening labour market.
On trade, manufacturers expect export activity to increase in the first half of 2026, while imports are projected to remain broadly unchanged. Inventory-to-sales ratios are forecast to edge lower, indicating continued focus on inventory discipline and working capital management, added the release.
Despite expectations of growth, survey respondents are less optimistic about 2026 than they were about 2025 a year earlier. Forty-four per cent believe 2026 will be better than 2025, 37 per cent expect conditions to remain the same, and 19 per cent believe 2026 will be worse. The resulting diffusion index for the 2026 outlook stands at 62.4 per cent, slightly lower than the 63.5 per cent recorded for 2025, suggesting cautious optimism amid lingering economic and cost uncertainties.
Fibre2Fashion News Desk (SG)
UK clothing exports fell 10.71 per cent YoY to £275 million (~$368.05 million) in October 2025 but rose from September, signalling tentative stabilisation.
Fabric and fibre exports also declined YoY, though monthly gains suggest restocking.
Q3 and full-year data show sustained weakness amid subdued European demand, cost pressures and stronger competition from Asia and Eastern Europe.
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Addressing an Apparel Exports Promotion Council (AEPC) awards event in New Delhi yesterday, Radhakrishnan said India earlier had a few competitors globally in garment exports, but now the list of such nations includes Bangladesh, Laos, Cambodia, Vietnam and several African countries.
India should sign more FTAs to gain a level-playing field in global textile and apparel export markets with competitors like Bangladesh, Vice President C P Radhakrishnan told an AEPC awards event in New Delhi yesterday.
He said India earlier had a few competitors globally in garment exports, but the situation has changed now.
The only constraint is the FTA with the US is “a little uncertain”, he noted.
“So FTA is a must… it is the greatest advantage they are having,” Radhakrishnan was quoted as saying by a news agency.
India aims at achieving a textile market size of $350 billion by 2030, with $100 billion in textile exports, he said, urging the apparel industry to actively explore new markets and adopt eco-friendly manufacturing practices, responsible sourcing and strategies to minimise waste.
The only constraint today is the FTA with the United States is “a little uncertain”, he noted, adding that it is only a matter of time.
Acknowledging several constraints on the Indian textile and apparel industry due to geopolitical situation, he expressed confidence that India’s textiles exports will double in the next three years.
India’s textiles and apparel exports stood at $37.75 billion in fiscal 2024-25.
Fibre2Fashion News Desk (DS)
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