Consumer Sector Navigates Mixed Signals: Resilience Meets Regional Challenges

The U.S. manufacturing sector is showing surprising resilience despite economic headwinds, with capital goods orders rising sharply in December 2024. According to the Commerce Department, business investment surged even as a Boeing strike disrupted supply chains, signaling cautious optimism among manufacturers. This uptick aligns with stronger-than-expected retail sales in late 2024, driven by consumer spending on vehicles and online goods. While inflation and interest rate concerns linger, proposed federal tax cuts and a projected 2.6% Q4 GDP growth suggest potential relief for businesses and households alike.

However, the global picture remains uneven. India’s manufacturing sector, once a bright spot in Asia, has stumbled due to a sudden slump in urban consumption. Growth in the industry plummeted to 2.2% in Q2 FY2025 from 7% the previous quarter, dragging down overall GDP expansion. Analysts warn that without urgent measures to revive consumer demand—particularly in discretionary categories like electronics and apparel—the slowdown could deepen. This contrasts starkly with the U.S., where retail resilience continues to buoy manufacturing activity despite inflationary pressures.

Amid these challenges, some industries are finding pockets of opportunity. The apparel and footwear sector anticipates a demand surge in late 2025, fueled by festive spending and a record number of weddings in markets like India. Retailers report improved consumer sentiment and localized manufacturing adaptations, enabling faster responses to shifting preferences. Meanwhile, India’s push toward self-reliance in electric vehicles gained momentum with a new Bengaluru testing facility, underscoring long-term bets on sustainable consumer goods. As manufacturers balance regional disparities, agility and domestic demand revival remain critical to weathering uncertainty.