In a questionnaire conducted by THE SENKEN among companies in Hokuriku, Japan’s largest manufacturing region of synthetic fibres, regarding their economic performance, the number of companies expecting textile imports to improve in the second half of 2015 (the period from July through December) has dropped by more than 10 points. This is another reversal in trends of a rising number of companies with a positive outlook about the future of exports, recorded in a survey conducted six months ago.

These results reflect the sense of uncertainty about future economic trends in China and Europe, which remains strong despite the fact the weak yen has boosted exports. The economic outlook for the Hokuriku region was on the upturn over the past three years, peaked in the first half of 2014, and has steadily deteriorated since then.

The questionnaire is conducted every six months with the participation of textile companies in the three Hokuriku region prefectures (Fukui, Ishikawa, and Toyama), whose flagship industry is synthetic filament textiles. Some 23 companies in the field of yarn processing, weaving and knitting, dyeing, and trading, participated in this edition of the survey.

The share of companies responding that the outlook for textile exports in the second half of the year will “improve” was 43.5%, nearly 15 points down from the previous survey. Despite the soaring expectations for growth of exports to North America and the Middle East fuelled by the weak yen, many of the surveyed companies expressed concern over economic stagnation in China and Europe.

Furthermore, many responded that despite robust demand, the “production capacity of the manufacturing regions has shrunk, imposing limitations on supply capabilities”. These opinions demonstrate that the positive impact of the exchange rates cannot be effectively linked to expansion in export volumes.

About 13% of all respondents (13 points less than the previous survey) responded that they expect the economic outlook for the Hokuriku manufacturing region to improve. This result is consistent with the decline in positivity of the surveyed companies, which peaked at 44.4% in the first half of 2014, and has been on a downturn ever since.

Some respondents voiced expectations for recovery of the domestic textile industry as a result of the increased costs of overseas procurement due to the depreciation of the yen, but the inventory surplus and the decline in the immediate operational rate fuel growing concerns over the future of the local economy.

Regarding production and sales from January through June this year, 43.5% of the companies responded that their volume has increased year-on-year. This result indicates a certain positive attitude with regard to the operational status of companies. On the other hand, 34.8% of the respondents said their volume has decreased, demonstrating a performance gap among the surveyed companies.

The types of materials that enjoy robust exports are inconsistent, with the exception of several companies’ response that materials for uniforms and for traditional religious and national dress for parts of the Middle East are in demand. As for types of materials for which exports have been particularly weak, the same lack of consistency can be observed, with the exception of a relatively large number of companies responding that exports of materials for clothing overall have been sluggish.

Some 52.2% of all surveyed companies responded that the cost of labour and sales prices have increased in the first half of the year. Against the backdrop of the growing price of crude oil and other imported resources, these developments indicate the rising costs have been passed on to product prices to a certain extent.

According to experts and relevant parties from the manufacturing regions, however, the business of retail stores remains sluggish, so it is still difficult to reach a 100% ratio of passing of costs to prices.

Regarding acceptance of orders and sales in the period from July to September this year, 43.5% of the respondents expect increases, maintaining the pace from the first half of the year; while 30.4% expect them to level out and 21.7% expect them to decline. As for unit prices, the largest portion of the surveyed companies (39.1%) expect them to level out, while 30.4% expect them to increase.

Companies that cooperated in the implementation of the survey　：

ICHIMURA SANGYO Co., Ltd., IMAI KIGYOJO, KAYTAY TEXINNO Inc., KOMATSU SEIREN Co., Ltd., SAN-ETSU Co., Ltd., DAIICHI AMIMONO Co., Ltd., Daiichi Orimono Co., Ltd., Chori Co., Ltd., TEC ONE Co., Ltd., TOYO ORIMONO, TOYO SENKO CORPORATION, Toshima Seni Co., Ltd., NISHIDE SHOJI, NOSHIRO GOUSEN Co., Ltd., HIKARI SHOJI, HIRONEN Co., Ltd., FUJI TATEAMI Co., Ltd., MATSUBUN TEXTILE Co., Ltd., MARUI ORIMONO, MEIRIN SENI Co., Ltd., Yamajin Co., Ltd., YOSHIMURASENMATSU SHOTEN, etc.