Economic Bulletin

RAPAPORT... CEO Confidence Rallies
The Conference Board measure of chief executive officer (CEO) confidence, which had declined to a historic low last quarter, posted a gain in the first quarter of 2009. The measure now stands at 30, up from 24 in the previous quarter, with a reading over 50 points reflecting more positive than negative responses.

CEOs’ overall assessment of current economic conditions remained quite pessimistic; no business leaders agreed that conditions had improved compared to six months ago. When evaluating their own industries, only 1 percent believed that conditions had improved, the same as in the final quarter of 2008.

However, CEOs’ outlook improved when looking ahead six months. This quarter, 17 percent of business leaders think economic conditions will improve in the next six months, up from approximately 11 percent last quarter. For their own industries, more than 26 percent of CEOs forecasted an improvement in the months ahead, up from about 12 percent last quarter. The Conference Board surveyed approximately 100 business leaders in a range of industries from mid-February to mid-March for this measure.

U.S. Jewelry CPI Jumps

The consumer price index (CPI) for jewelry in the U.S. rose 3 percent year-on-year to 156.84 points during the month of March, according to data provided by the Bureau of Labor Statistics (BLS). The index was just over one point higher than it was in February, making March the 14th consecutive month when the jewelry CPI was over 150 points. Prior to this, the index had not hit 150 points since February 1998. For the watch and jewelry categories combined, the index for March increased 3 percent to 149.4 points. The monthly index is based upon a reference point of average prices in 1986, which is set at 100 points.

U.S. Polished Diamond Imports Plunge

U.S. imports of polished diamonds decreased 53 percent to $774 million in February 2009 compared with the previous year and dropped 46 percent by volume to 664,721 carats, according to data from the Bureau of Labor Statistics (BLS). Polished exports from the U.S. declined 43 percent to $669.3 million. Net polished imports, the excess of imports over exports, contracted 75 percent to $104.7 million.

Rough imports plummeted 92 percent to $5.9 million in February and rough exports fell 84 percent to $5.8 million. Net rough imports — rough imports less exports — decreased nearly 100 percent to $78,355. The U.S. February net diamond account, measuring total imports less total exports, declined 77 percent to $104.8 million.

India’s Polished Exports Tumble

India’s polished diamond exports fell 24 percent year-over-year to $1.1 billion in March, according to data published by the Gem & Jewellery Export Promotion Council (GJEPC). Polished imports declined 17 percent during the month to $616 million and the country’s net polished exports, its excess of exports over imports, dropped 31 percent to $524.1 million.

The country’s rough imports slumped 57 percent to $311.3 million, while rough exports fell 13 percent to $60.1 million. Net rough imports — rough imports less exports — declined 61 percent to $251.3 million. India’s March net diamond account, measuring total exports less total imports, increased 151 percent to $272.8 million.

The organization reported that during the fiscal year that ended March 31, 2009, the United Arab Emirates (UAE) was India’s largest export destination for the gem and jewelry sector, which includes exports of diamonds, colored gemstones and gold. The UAE accounted for 31 percent of India’s gem and jewelry exports during the fiscal year, followed by Hong Kong with 25 percent and the U.S. with 20 percent. Total gem and jewelry exports rose 2 percent to $21.1 billion for the fiscal year.

Belgium’s Diamond Trade Erodes

Belgium’s polished exports continued to decline in March, dropping 33 percent compared with the previous year to $712.9 million and slipping 18 percent by volume to 663,252 carats, according to data from the Antwerp World Diamond Centre (AWDC). Polished imports sank 36 percent to $718.4 million and 17 percent by volume to 721,032 carats during the month.
Rough imports tumbled 50 percent to $446.2 million and 24 percent by volume to 6.9 million carats. Rough exports were down 52 percent to $440.1 million and 37 percent by volume to 6.1 million carats.

For the year to date, polished exports contracted 36 percent to $2 billion and decreased 28 percent by volume to 1.7 million carats. Polished imports sank 37 percent to $1.9 billion and 34 percent by volume to 1.8 million carats. Rough imports declined 59 percent to $1.2 billion and 37 percent by volume to 19.8 million carats.

The U.S. was Belgium’s top polished diamond export destination from January to March, although the amount of goods fell approximately 40 percent, both by volume and by value. Hong Kong was second on the list, buying 362.9 million carats, a drop of 4 percent, worth $446.8 million, a decline of 22 percent.

Israel’s Rough Imports Tank

Israel finished its first quarter with imports of rough diamonds down 79 percent to $278 million, according to the country’s Ministry of Industry, Trade and Labor. Rough exports decreased 71 percent to $318 million. As a result, net rough exports — imports minus exports — fell to a deficit of $40 million, compared with a surplus of $225 million during the same period a year earlier.
 In the three months that ended March 31, 2009, the country’s polished diamond exports dropped 57 percent to $935 million, while polished imports declined 61 percent to $408 million. Israel’s net polished exports, measuring the excess of exports over imports, fell 52 percent to $527 million.

The ministry decided in March to publish Israel’s diamond trade data on a quarterly basis, rather than monthly, as it had in the past. The ministry did not release November or December 2008 trade data. RDR will report monthly export figures based on data provided by the country’s Central Bureau of

Statistics (CBS). Japan’s Polished Imports Slide

Japan’s polished diamond imports decreased 27 percent in February to $48 million, according to data published by the J Club, based on statistics from the Customs Bureau of the country’s Finance Ministry. Imports by volume were basically flat at 167,858 carats, while the average price fell 28 percent compared with one year ago to $286 per carat.

Diamond imports slowed from each of Japan’s main sources — India, Belgium and Israel. However, Japan’s imports from Hong Kong rose 16 percent to $3.6 million.

Lazare Kaplan’s Loss Tops $3 Million

Lazare Kaplan International posted a net loss of $3.5 million for its fiscal third quarter, down from profits of $3.3 million one year ago. Net sales at Lazare Kaplan sank 49 percent to $42.2 million for the three months that ended February 28. Polished diamond revenue fell 53 percent to $18 million. Rough sales were down 45 percent to $24.2 million, a decrease that primarily reflected reduced sourcing activities, as the company declined to purchase rough diamonds that it considered overpriced, according to a statement from the firm.

Article from the Rapaport Magazine - May 2009. To subscribe click here.