Less than 1% of material used for clothing production is recycled back to clothing

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Less than 1% of material used to produce clothing is recycled into new clothing (2016, multiple sources).

This stunning statistic perhaps has a lot to do with the current ways of recycling - which is dominated by physical recycling in which owing to the mechanical stresses, the cotton fibers are shortened and their quality also degraded, and as a result, only a small percentage could be used for making new clothes.

Even if infinite recycling of fibers were not possible, if one is able to recycle the same fiber even three or four times to make an equivalent clothing (and post that use it for downcycled textiles), that alone could make a big difference to the environmental and resource sustainability of textiles?

Is it possible for the current mechanical recycling methods to refine their technology such that a large proportion of the recycled fibers are reused into clothing again?