Serbia’s clothing, textile and leather industries experienced lower production during the first seven months of 2026, accompanied by falling export receipts in the clothing and leather segments. The developments point to pressure on manufacturers that depend on regular factory orders and overseas sales to sustain their operations. According to MAT, clothing production declined by 11.5% year-on-year in January–July, while textile output decreased by 4.4%. Production of leather and related goods contracted by 6.5% over the same period. Export performance also weakened. Clothing exports generated €18.8 million less revenue, a decline of 4.6%, while exports of leather products fell by €20.1 million, or 7%.
July Production Figures Show Further Contraction
The downturn continued in July, when clothing production dropped by 12.9% year-on-year and textile output decreased by 12.2%. Production of leather products was down 4.7% compared with the same month a year earlier.
The simultaneous declines in manufacturing output and export receipts indicate that weaker factory activity was not accompanied by higher export revenue in the clothing and leather segments. The aggregate figures do not establish whether reduced orders, changes in product mix or developments at individual factories were responsible for the declines. The reported results also do not demonstrate that all manufacturers are experiencing the same conditions, as individual companies may have different customers, production arrangements and sales markets.
Lower Orders Affect Manufacturing Costs and Investment
For contract manufacturers, a reduction in order volumes can make it more difficult to spread factory overheads across production and maintain predictable staffing levels. Companies selling their own products face different cost pressures, including expenditure on design, inventories and distribution.
Investment decisions also depend on individual businesses’ commercial circumstances. New machinery can improve production efficiency, but the financial return depends on having sufficient orders to utilise the equipment. Capacity expansion backed by uncertain demand carries a different risk profile from replacing machinery for an established customer base.
The immediate challenge for Serbia’s clothing, textile and leather manufacturers is to stabilise order volumes amid declining production and export receipts. Without a recovery in demand, efficiency improvements may ease pressure on margins without resolving the weakness in sales.
