Li & Fung optimistic on US growth prospects

Consumer demand is stronger than estimated but the European market remains weak.

Even as the purchasing manager index compiled by HSBC released on March 23 pointed to a fifth straight month of contraction in the mainland's manufacturing activity.

Li & Fung's expressed that orders from the US for manufacturing in the mainland has been good.

Based on our orders so far this year, US consumer spending may be expected to exceed the 1 to 2 per cent growth anticipated by economists.

The company, a global consumer goods procurer and logistics service provider, sourced 58 per cent of its wares from the mainland in 2011 up marginally from 57 per cent in 2010.

Although labour costs on the mainland rose over 14 per cent last year, the company spokesman said prices of some materials, such as cotton, have come down, helping to ease the cost pressure.

Core operating profit grew 22 per cent from 2010 to US$882 million.

The 19 companies acquired by Li & Fung last year had a combined core operating profit of US$211 million on an annualised basis last year.

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