As textile production for the local market slows annually, cheaper imports of clothing and shoes have soared 16 percent over the first eight months of this year.
"As a result of the massive imports from the Far East, which enjoy lower labor costs, textile production for the local market is coming down gradually," Zvi Lieberman, director of the Textile and Fashion Industries Association said last week.
"Today the textile industry in Israel focuses mainly on exports to the US and Europe, which amounted to $1.1 billion in 2005."
Lieberman added that the profitability of the mostly export-oriented textile companies was suffering from the weak US dollar rate.
"Particularly those companies, which are buying raw materials in euros and selling in dollars are in deep trouble," he said.
According to data compiled by the Federation of Israeli Chambers of Commerce, imports of clothing and shoes from January to August this year increased by $93 million to a volume of $660m.
"Israel cannot compete with low labor costs of the Far East; even local fashion houses like Castro or Fox are producing in the East," said Israela Mani, head of the economics department of the FICC.
The survey showed that imports of consumer goods increased by 10% or $340m. to $3.89b. over the first eight months of 2006 compared with the same period last year.
"The rise of imports of consumer goods is an indicator for an increase in private consumption and thus an increase of available disposable income," Mani explained.
For all of 2006, economists at the FICC expect imports of consumer goods to grow by 10% or $530m. to a total volume of $5.8b.
Food and beverages imports saw an increase of 13%, or $88m., to a total volume of $775m. over the period while imports of drugs rose by 14%, or $30m., to $239m. while imports of home tools increased by 12%, or $28m., to $253m.