The economic slowdown in the United States is threat to the clothing and textile industry in Mexico and Central America, already under stiff competition from Asia.

Retail sales in the United States declined in September and October to their lowest in three years, a sign the global credit crunch.

For years Central America and Mexico have watched factory after factory pack up and move to China in search of cheaper labour, despite signing free trade deals to secure preferential terms for their exports.

The textile and clothing exporters and factory workers who sew clothing in the assembly plants around the Honduran town of Valle de Sula are already struggling, as only few factories are able to adapt by specializing in niche products or just-in-time orders.

In 2002 all U.S. textile imports came from Mexico and Central America, and 13% from China. In 2007 China provided 31% of all U.S. clothing imports and only around 15%came from neighbors of the United States.

This year in August and September Honduras lost 3,465 manufacturing jobs and the industry sees another 2,000 vanishing before the end of the year due to the U.S. slowdown.

Mexican clothing producers say they could lose up to 18,000 jobs by the end of the year and  owners in other Central American countries fear their businesses will soon meet a similar fate.