Italian manufacturing is in crisis, Italian fashion more so

Recently, ISTAT published data regarding the decline in Italian production for last July – a decline that has continued for eighteen months, particularly affecting the textile and apparel sector, which, with its 18.3% drop, is the most troubled in the entire Italian industrial and manufacturing landscape. These figures, somewhat brief in the official ISTAT statement, echoed the data on the fashion industry presented during the National Chamber of Italian Fashion's conference in preparation for Milan Fashion Week, which highlighted a sharp slowdown for the Italian fashion sector in 2024 following an initial post-pandemic boom. In 2024, according to projections, sales in the fashion sector and related industries (textiles, apparel, leather goods, footwear, jewelry, eyewear, and cosmetics) are expected to decrease by 3.5%, settling at a turnover of 97.7 billion euros. This figure represents a contraction from the 101.3 billion euros recorded in 2023, a year in which the sector saw a 2.5% growth compared to the previous year, which had itself seen a 20.8% increase in turnover compared to 2021. There was also a 6.1% contraction in sales in the first half of 2024, continuing from the second half of 2023. Better health for exports, which grew by 2.9% in 2023, reaching 88.8 billion euros, and are projected to continue growing by 5.5%, reaching a total value of 93.7 billion euros this year – but just because the value is increasing doesn’t mean the overall picture is positive.

In just the first five months of 2024, exports grew by 5.1% compared to the same period in 2023, but with differences across categories: textiles, apparel, leather goods, and footwear fell by 3.8%, while jewelry, eyewear, and cosmetics rose by 29.6%, specifically, jewelry saw an incredible 58% growth. However, it is clear that these figures refer to categories covering only a small portion of the accessories and beauty sectors, almost suggesting that the core business of many companies is drying up. Supporting the picture outlined by the CNMI, ISTAT data reveal further signs of weakness for the entire sector, especially fashion, where textiles, apparel, leather, and accessories saw a dramatic 18.3% drop, while the transport manufacturing sector, the second most affected, suffered an 11.4% reduction. The critical situation in the fashion sector, particularly in textiles and apparel, is reflected in the struggles of the leather district in Florence, among the hardest hit by the reduction in purchases of Italian products by major brands. Between January and July 2024, according to Il Sole 24Ore, production in the textile and apparel sector decreased by almost 11 percentage points – a dramatic figure also resulting from the current difficulty in finding skilled workers such as seamstresses, leather workers, artisans, and generally specialized operators in the manufacturing field. The rising prices of raw energy materials, with Brent oil reaching an average value of 84.2 dollars per barrel between April and August 2024, also present a challenge.

The fashion sector, particularly luxury, is also suffering from a shift in consumer preferences, driven both by global economic uncertainty (geopolitical tensions weigh heavily on production and transportation costs, even though the international economy remains stable) and a growing focus on more conscious and sustainable consumption. The declining demand for high-end goods is hurting Italian companies, which are heavily dependent on luxury product exports and thus suffer not only from the general impoverishment of the sector in terms of global demand (last week Barclays called the weakness in the Chinese economy «structural, not cyclical» in reference to luxury consumption, which is not expected to recover) but also from the production slowdown and, ultimately, the decline in exports.