Global Consumer Spending Shows Resilience In Second Quarter
For ETF investors, the useful takeaway is not simply that consumer spending held up, but that the strength was uneven. PMI-based consumer readings can help distinguish between markets where demand is broadening across goods and services and those where activity is losing momentum. That matters for funds with regional or sector tilts, because the same โconsumerโ label can hide very different underlying mixes of tourism, recreation, retail and export-linked orders.
The article also highlights a methodology point that portfolio builders should not ignore: PMI consumer data are high-frequency indicators, but they are still survey-based proxies rather than hard spending figures. They are best used as a directional tool for rebalancing, not as a stand-alone trigger. For ETF portfolios, that means leaning on them to inform relative weightingsโsuch as developed vs. Asian exposure or discretionary vs. broader economic sleevesโwhile keeping longer-term strategic allocations intact.
Regional dispersion is the bigger allocation signal. When one region shows stronger services demand and another weakens across both goods and services, broad global consumer ETFs can behave very differently from concentrated regional funds. Investors comparing these products should look past the headline theme and assess where revenue sensitivity is really coming from, especially if a fundโs holdings are exposed to travel, domestic services or export-dependent consumer producers.
The practical portfolio lesson is behavioural as much as analytical: consumer spending narratives can tempt investors to chase whichever region is currently leading. A more disciplined approach is to use consumer ETFs as cyclical satellites inside a diversified core, then rebalance when regional momentum becomes too concentrated. That helps avoid overcommitting to one part of the consumer chain just as the cycle starts to normalize.
Resilient global consumer spending
S&P Global Market Intelligence’s PMI surveys are widely used in gauging national economic growth, inflation and labour market trends ahead of comparable official data. However, the survey data, which cover all major developed and emerging market economies, can also be aggregated to provide global economic data sets, allowing the analysis of worldwide economic trends on a sectoral basis. For example, the PMI data relating to consumer services activities, which includes spending in sectors such as tourism, restaurants and other recreation, can be combined with PMI data for consumer goods to provide an overall view of consumer industry activity. These data have in the past exhibited a robust correlation with official consumer expenditure data derived from national accounts data globally. These PMI data showed output of these consumer-oriented sectors growing for a seventh successive month in June, albeit the rate of expansion slowing compared to May to the weakest since December 2023. The overall expansion in the second quarter nonetheless matched that seen in the first quarter, which had in turn signaled a recovery from a mild contraction seen in the fourth quarter of last year.
Spending led by rising demand for services
Looking at the consumer data by sectors, the PMI surveys reveal how, after falling dramatically during the early phase of the pandemic (when demand switched to goods during lockdowns), orders for consumer services have since been on a volatile path. Strong periods of demand for services such as travel and tourism were evident as economies reopened in the first halves of 2022 and 2023 (the latter seeing the sudden full removal of COVID-19 containment measures in mainland China). More recently, demand has risen for both goods and services among consumers during the year-to-date in 2024, albeit with services generally seeing the stronger uplift on average in the second quarter.
The PMI data relating to new orders for consumer goods has nevertheless also remained in growth territory during 2024, and given the PMI series’ close correlation with official retail sales data, suggests retail spending on goods had been rising at an annual rate of approximately 1.5% in the second quarter.
Europe lags in terms of consumer spending
The sector data can be analysed on a regional basis, though with the caveat that metrics such as orders for goods will include export sales. These data showed demand for consumer goods diverging, with accelerating new orders growth in the US and Asia (the former notably exhibiting some volatility) contrasting with an increasing rate of decline for consumer goods orders in Europe. In terms of consumer services, global orders have been led by Asian markets in recent months, with new orders for consumer services even falling into marginal decline in Europe during June for the first time since last November. Demand for consumer services in the US meanwhile expanded for a second successive month in June, rebounding from a fall in April to point to solid spending growth over the second quarter as a whole.
The combined index of new orders for consumer goods and services (equally weighted) averaged just 48.7 in Europe during the second quarter. That compared with averages of 51.4 in the US and 54.3 across Asia, underscoring a spending outperformance across Asia that has now been evident since late-2022.
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Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.
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