Growth continues, but credit risk remains elevated among retailers of consumer durables.
Global consumer durables / retail performance: ongoing recovery in advanced markets
- We expect consumer durables sales in advanced markets to rebound further in H2 of 2024 and to accelerate in 2025.
- However, credit risk of consumer durables retailers in advanced markets remains elevated, with smaller players especially vulnerable to defaults and insolvency.
- Growth in the Asia Pacific region will continue next year, but cool down somewhat compared to 2024, mainly due to lower demand in China.
- On a global level, downside risks remain, such as tumbling stock markets, increasing unemployment and volatile commodity prices. All this could rein in household spending.
USA: Spending to accelerate in 2025, but retailers are facing headwinds
- Despite the recent softening of the US labour market we expect US consumers to keep on spending, supported by gradual disinflation and modest wage gains.
- We expect US consumer durables sales growth to level off in 2024, followed by a 1.7% increase in 2025. Consumer electronics sales will grow 4% in 2024, followed by a 3% decrease next year.
- For US retailers supply chain and inventory challenges have abated, but they are facing other headwinds. There has been an increase in distressed debt exchanges by retailers recently.
Mexico: Higher consumer confidence after the elections
- After contractions in 2022 and 2023, we expect consumer durables sales to increase by 0.9% in 2024 and 2.6% in 2025.
China: Sluggish domestic consumption dampens growth
- We expect consumer durables sales to increase by 6.4% in 2024. However, this growth is mainly driven by exports, while domestic sales are subdued.
- Next to the ongoing issues in the property sector, The deflationary environment and higher unemployment (in particular among younger people) additionally put a brake on consumer spending.
- We expect Chinese consumer durables sales in 2025 to slow down to 1.8% year-on-year. Higher tariffs on Chinese exports to the US after the presidential elections in November are a downside risk.
India: Ongoing growth and good long-term prospects
- Sales of consumer durables are predicted to rebound by 14.6% in 2024, after a 9.2% decline last year. The recovery is driven by higher sales of domestic appliances and furniture.
- The long-term outlook for consumer durables remains positive due to increasing household purchasing power and a growing middle class.
European Union: Consumer durables sales growth to accelerate in 2025
- After a 2.9% contraction in 2023, consumer durables sales in the region are forecast to rebound modestly by 0.6% in 2024. Still tighter monetary policies are holding back higher consumer spending.
- We expect consumer durables growth in the European Union to accelerate to 2.8% in 2025, given a more benign inflationary environment and monetary easing.
France: Political uncertainty impacts consumer sentiment
- We expect French consumer durables sales growth to slow down in 2024 and 2025, to 0.9% and 0.4% respectively. Consumers are cautious about spending, although real household income has started to rise and wage increases are outpacing inflation.
Germany: Sector performance remains subdued
- After a 2.7% contraction in 2023, consumer durables sales in Germany are expected to decrease again this year, by 0.7%. A softening labour market could trigger further spending restraint in the coming months. At the same time input costs for retailers remain high and credit is expensive.
United Kingdom: A modest growth outlook
- After contractions in 2022 (-4%) and 2023 (-2.2%), we expect consumer durables sales in the UK to level off in 2024 and to grow by only 0.8% in 2025. Retailers struggle with the lack of a comprehensive demand recovery and higher costs.
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