"cloth industry" is correct and can be used in written English.
It can be used to refer to the industry dedicated to producing or trading in cloth goods. For example: "The cloth industry has experienced significant growth in recent years due to increased demand for stylish and synthetic fabrics."
Bridgwater is a former port for its now-moribund cloth industry; its mixed industrial base produces bricks and tiles, footwear, and furniture.
Newark had a flourishing cloth industry in the Middle Ages.
The rise of the Florentine woolen cloth industry and of banking provided a basis of capital.
By the late Middle Ages it had a thriving cloth industry.
The cloth industry flourished in the 16th century, and serge was manufactured in the 17th.
Ghent's cloth industry disappeared in the ensuing decades, however, since it was unable to compete with English cloth manufacturers.
Tourism is of increasing importance, alleviating some of the urban unemployment problem and encouraging handicraft (wood carvings, filigree jewelry, hand-dyed cloth) industries.
In the 17th and 18th centuries the wool and cloth industries continued to thrive, powered by the waters of the River Sheppey.
Companies have contributed more than $17 billion in recent years to the Indian cloth and clothing industry, according to Texprocil, the export-promotion body of the Indian cotton textile industry.
The most important of these was the wool-cloth industry.
In the wool-cloth industry, which dominated the manufacturing economy of Florence, the lanaioli (wool entrepreneurs) worked on the putting-out system: they employed large numbers of people (9,000, by some calculations) who worked in their own homes with tools supplied by the lanaioli and received wages by the piece.
