The ​global personal luxury goods market is showing signs of a recovery in the ‌second quarter, despite the war in the Middle East, as demand in the US was stronger than expected, according to consultancy Bain & Company.

In an update to its closely watched annual outlook for the sector, Bain ​said its base-case scenario now points to a 2 per cent to 4 per cent rise in personal ​luxury sales this year. That compares with a previously forecast 3 per cent to 5 per cent increase ⁠published in November, before the outbreak of the US-Israeli war on Iran.

The personal luxury goods ​market, which was valued at €358 billion ($406 billion) in 2025, has contracted over the past two years. ​It shrank by 2 per cent at current exchange rates in 2025, although it edged up 1 per cent in constant currencies.

Looking at the broader luxury industry, experiences continue to outpace tangible goods, according to the study, produced with Italian ​luxury industry group Altagamma.

“We see growing uncertainty and turmoil at the macroeconomic and socio-political levels, ​but the market is there,” Bain partner Francesca Levato told Reuters.

Geographically, the growth in the US, led by ‌native brands ⁠and younger consumers’ spending, is partly offsetting a slowdown in the Middle East and Europe. China is slowly recovering, with growth led more by ready-to-wear products than leather goods.

“America is growing more than expected and China is recovering faster than expected,” Levato said.

Europe was impacted by depressed ​tourist flows, though signs ​of stabilisation emerged in ⁠May.

AN AI ROLE IN LUXURY SPENDING

Levato said the industry has lost around 70 million consumers since 2022, as brands raised prices and focused ​more heavily on top-spending clients.

“The industry should refuel the growth of the ​consumer base ⁠rather than focus only on the top 1 per cent,” she said.

The study also found artificial intelligence is rapidly reshaping how consumers discover and evaluate luxury brands. About half of luxury consumers already use AI ⁠in making ​purchases, relying on it for discovery and to compare ​products.

The second-hand market is on the rise, with half of luxury shoppers now consulting that market before buying new things.