According to IBISWorld, Australia’s manufacturing sector has declined by 5.70 per cent over the two years through 2020-21.
However, the knitted product manufacturing industry has defied odds and upped by 13.20 per cent in its revenue to US $ 90.60 million in the same period.
Global supply shortages and tariff reductions have opened up new doors for clothing manufacturers in Australia.
“Australian knitted product manufacturing has been in long-term decline, with revenue contracting at an annualised 5.60 per cent over the five years through 2020-21. However, export revenue has increased by 37.1 per cent during the COVID-19 pandemic, providing a lifeline to Australian businesses,” commented Ross Dean, Senior Industry Analyst, IBISWorld.
The pandemic disrupted supply across North Asia, which typically accounts approximately 40 per cent of the global apparel manufacturing industry and this reason can be cited behind an unexpected benefit for Australian clothing manufacturers.
Dean further added that the loss of supply from Asia, particularly the drop in China’s output, left the global economy looking for other sources of clothing, supporting demand for Australia’s clothing manufacturers.
“For example, Australian exports of knitted apparel to Japan jumped by more than 320 per cent in 2019-20, and exports across the manufacturing of men and boys clothing segment increased by 33.9 per cent,” shared Dean.
According to IBISWorld, while domestic demand of clothing in Australia is projected to continue declining, exports of knitted garments are forecast to grow by an annualised 1.80 per cent over the five years through 2025-26.
The growth can be attributed to the recent changes to tariffs on knitted apparel and other clothing items to New Zealand and ASEAN.
Under free trade agreements with ASEAN and New Zealand, the tariff on knitted items such as jerseys and pullovers dropped from 10 per cent in January 2019 to ZERO in January 2020.