RAPAPORT... The Conference Board Consumer Confidence Index, which declined in May, sank even further in June. The Index now stands at 50.4, down from 58.1 in the previous month, the fifth-lowest reading ever. Spokespersons for The Conference Board observed that the silver lining may be that consumer confidence could be nearing the end of its downward spiral.
Consumers’ assessments of present conditions grew dimmer. The Present Situation Index decreased to 64.5 from 74.2. Those saying business conditions are “bad” increased to 32.5 percent from 29.7 percent, while those describing business conditions as “good” dropped to 11.5 percent from 13 percent in May. Consumers’ appraisal of the job market was also more pessimistic. Those believing jobs are “hard to get” increased to 30.5 percent from 28.3 percent. Those claiming jobs are “plentiful” dwindled to 14.1 percent from 16.1 percent.
Consumers’ short-term expectations deteriorated as well. The Expectations Index decreased to 41.0 from 47.3, an all-time low. Those expecting business conditions to worsen over the next six months rose to 33.9 percent from 32.9 percent in May, while those anticipating business conditions will improve dropped 8.8 percent from 10.6 percent.
The outlook for the labor market was also more pessimistic. The percentage of consumers expecting fewer jobs in the months ahead increased to 35.5 from 32.3, while those anticipating more jobs declined to 8.0 percent from 9.0 percent. The proportion of consumers expecting their incomes to increase sank to 12.3 percent from 14.1 percent. The monthly Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.
U.S. Polished Exports DipThe U.S.’s polished diamond exports continued to rise in April 2008, but fell short of the record $1.2 billion seen in the previous two months. Polished exports grew 34 percent to $1.1 billion, according to government data. Imports rose 25 percent to $1.5 billion.
Rough exports increased 8 percent to $56 million in April, while rough imports fell 39 percent to $20 million.
For the first four months of the year, polished imports to the U.S. rose 15 percent to $6.4 billion and polished exports increased 40 percent to $4.7 billion. Net polished imports fell 22 percent to $1.8 billion. Rough imports for the period dropped 4 percent to $267 million and rough exports declined 25 percent to $144 million.
UCLA Says No RecessionThe UCLA Anderson Forecast confirmed that there is no recession now and its authors don’t predict one in the coming year. However, they did note that the most recent unemployment increase, from 5 percent to 5.5 percent, falls within “recession range.”
David Shulman, senior economist for UCLA, wrote in the report, “Although the economy will likely avoid falling into a formal recession, the economic outlook through 2009 is decidedly subprime.” Shulman predicted that normal growth patterns would emerge in 2010.
China’s Consumer Price Index Up
China’s consumer price index (CPI) rose 7.7 percent in May 2008, according to figures released by the country’s National Bureau of Statistics. China’s CPI hit a 12-year high of 8.7 percent in February and was 8.5 percent in April. From January through May, the general level of accumulated CPI increased 8.1 percent annually, with urban areas registering a 7.7 percent increase and rural areas up 8.8 percent. Earlier this year, the government set an annual target CPI of 4.8 percent. To curb inflation, the central bank has raised interest rates six times and the reserve-requirement ratio 14 times in the past year. On June 7, the government instructed commercial banks to raise the reserve-requirement ratio by 1 percent to a record high of 17.5 percent.
India’s Polished Trade GrowsIndia continued to see growth in its polished diamond trade in May, particularly as imports surged to satisfy local demand. The Gem and Jewellery Export Promotion Council (GJEPC) reported that polished exports grew 32 percent to $1.3 billion in May 2008. Polished imports, however, rose 71 percent to $482.8 million. Rough imports rose 23 percent to $917.3 million and rough exports grew 49 percent to $51.6 million.
Signet Profits DropSignet Group reported a sales increase of 1 percent to $822.5 million for its first quarter ended May 3, 2008. Same-store sales decreased by 2.5 percent, while profits dropped 24 percent to $24.7 million. U.S. sales, which comprise 74 percent of Signet’s total annual sales, were virtually flat at $631.1 million versus $632.3 million last year. Same-store sales were down 4.7 percent. The retailer’s gross margin was up 50 basis points, with price increases implemented after Valentine’s Day and in March offsetting higher commodity costs, greater promotional activity and sales mix changes.
Botswana’s Diamond Production UpBotswana’s diamond exports rose 7 percent in the first quarter of 2008. The Bank of Botswana (BoB) reported that exports grew 54 percent in U.S. dollars compared with the same period of 2007, while overall exports for 2007 grew 4 percent to $3.4 billion. The Diamond Trading Company Bostswana (DTCB), an equal partnership between De Beers and the Botswana government, opened a sorting facility in Gaborone, where an estimated $6 billion worth of rough will be sorted and exported in 2009. DTCB expects to sell $375 million in rough this year and $550 million by 2010. Debswana, another joint venture between De Beers and the Botswana government, produced 33.8 million carats in 2007, with over 34 million carats sold.
Japan’s Polished Imports DipJapan’s diamond imports fell 12 percent to $66.3 million in April 2008 from 75.3 million in March, according to The J Club. The dip can be attributed to a 5.2 percent drop in buying from India, Japan’s largest source, to $30 million for the month and a 28 percent decrease in imports from Belgium to $15 million. Polished imports from Israel were up 12 percent to $8.3 million, while Hong Kong imports quadrupled to $5.2 million. Polished imports were up 49 percent by volume to 265,176 carats. From January through April, Japan’s polished imports dropped 8 percent by value to $280.9 million, but increased 3 percent by volume to 809,468 carats.
Belgium’s Polished Trade RisesBelgium’s polished diamond exports rose 14 percent to $1.1 billion in May 2008, according to statistics provided by the Antwerp World Diamond Centre (AWDC). Polished imports also grew 14 percent to $979.9 million. Rough imports increased 3 percent to $962.7 million for the month, while rough exports grew 15 percent to $1 billion. During the first five months of 2008, the country’s polished exports grew 24 percent to $5.4 billion, while polished imports rose 29 percent. Net polished exports fell 43 percent to $169.9 million. Rough imports for the year to date increased 14 percent to $4.8 billion, while rough exports grew 12 percent to $5.1 billion.
Article from the Rapaport Magazine - July 2008. To subscribe click here.