Forecasters reported last month of growing concerns regarding the strength in the outlook for private consumption growth in some of the key retail markets for wool.
Since the US is the third largest consumer of wool globally, forecast demand conditions are of particular significance.
A rapidly slowing housing market has raised concerns over the outlook for consumer demand in the US going into 2007. Currently a "soft landing” is expected for the US mid-2007.
Similarly, on the Western European Continent forecast conditions appear to be weaker going into 2007, with Germany in particular anticipating anaemic consumption growth.
In other parts of Western Europe, apart from the UK, more regulated labour markets and a shrinking working populations appear to be harbingers of moderately weaker growth.
Similar to the Continent, a recovery in consumption in Japan remains fragile. Spending is not expected to revive more fully on the Continent nor in Japan until 2008.
In contrast to the rest of Western Europe, prospective private consumption demand in the UK in 2007 remains buoyant, finally rebounding after some period of slowdown.
Similarly, conditions in China remain particularly positive. China's private consumption is expected to grow very solidly for the next four years.
Since China is the world's largest consumer of wool, for both manufacturing and retail, this strength in demand will help support some of the gloomier conditions in other key regions in 2007.
Australian Wool Innovation Limited
marketing@alchempro.com
