Economic Bulletin

RAPAPORT... Consumer Confidence Continues To Drop

The Conference Board Consumer Confidence Index fell sharply in February to 75.0, down from 87.3 in January. The Expectations Index declined to 57.9 from 69.3 and the Present Situation Index decreased to 100.6 from 114.3 in January. Lynn Franco, director of the Conference Board Consumer Research Center, reported that the Consumer Confidence Index continues to lose ground and, with the exception of the Iraq War in 2003, is now at its lowest level in nearly fifteen years.

Consumers’ appraisal of current conditions weakened a bit in February. Those claiming business conditions are “bad” increased to 21.8 percent from 20.1 percent, while those saying business conditions are “good” declined to 18.5 percent from 20.6 percent. Assessment of the job market was also more pessimistic than in January. Those stating jobs are “hard to get” rose to 23.8 percent from 20.6 percent, while those claiming jobs are “plentiful” decreased to 20.6 percent from 23.8 percent.


Core Inflation Up

For the past six months, the core inflation rate rose 3.1 percent, or 1.1 percentage point above the Federal Reserve’s traditional “comfort zone” of 1 to 2 percent. January’s core inflation rate, which is the U.S. consumer price index excluding food and energy prices, rose 0.3 percent, the biggest gain in seven months. The U.S. consumer price index increased 0.4 percent in January from the previous month. Annual consumer prices rose 4.3 percent in January 2008, compared with one year ago, while annual core inflation rose 2.5 percent. The monthly Royal Bank of Canada (RBC) CASH Index, measuring consumer sentiment, slipped below 50 points in February for the first time since the poll began in January 2002. Earlier in the month, 34 percent of consumers told USA Today/Gallup that economic conditions in the United States were “poor.”


U.S. Net Rough Imports Soar

The U.S. International Trade Administration reported that net rough imports rose 182 percent to $31 million. Rough imports during the month grew 89 percent to $104 million and rough exports fell 65 percent to $73 million. Polished diamond imports increased 17 percent to $1.3 billion in December 2007. Polished exports were up 41 percent to $1 billion, while net polished imports fell 27 percent to $285 million. For 2007, polished imports rose 10 percent to $18.1 billion, and polished exports increased 24 percent to $11.3 billion. Net polished imports decreased 7.6 percent to $6.8 billion. Rough imports for the year grew 6 percent to $849 million, as exports increased 11 percent to $490 million, causing net rough imports to remain flat at $357 million.


Belgium’s Polished Exports Up

Belgium’s polished diamond exports grew 21 percent to $909.97 million in January, the Antwerp World Diamond Center (HRD) reported. By volume, polished exports rose 5 percent to 753,860.11 carats, as the country’s average polished export price increased 15 percent to $1,207.09 per carat. Polished imports rose 41 percent to $1.061 billion causing net polished imports — polished exports less imports — to fall to negative $151.65 million for the month. However, Belgium’s net polished exports one year ago were negative $965,749.

Rough imports for the first month of 2008 increased 28 percent to $1.05 billion, while rough exports grew 7 percent to $1.03 billion. Net rough imports — rough imports minus exports — moved to positive numbers at $26.83 million, compared with a negative $140.96 million in January 2007. Belgium’s January 2008 net diamond account — net polished exports less net rough imports — moved into the red to negative $178.48 million, compared to positive $139.99 million one year ago.


Israel’s Rough Exports Up

For February, Israel’s rough diamond exports increased 10.8 percent to $343 million, while its net rough imports — rough imports minus exports — grew 30.7 percent to $189 million. Israel’s rough diamond exports soared 78.6 percent to $443 million in January, while rough imports grew 27.1 percent to $342 million, the nation’s Ministry of Industry, Trade and Labor reported.

For the year to date, Israel’s polished exports rose 14.4 percent to $1.6 nilliuon, while polished imports fell 2.9 percent to $605 million, as net polished exports grew 29 percent to $954 million. Israel’s net diamond account for January and February increased 50.5 percent to $866.95 million.


India’s Net Diamond Account Down

India’s diamond trade started the year on a negative note with polished imports far outpacing exports. The country’s net diamond account for January — net polished exports less net rough imports — moved into the red with $71.42 million more rough imports, compared to $152.85 million in polished one year ago, according to the Gem and Jewellery Export Promotion Council (GJEPC). The country’s polished exports grew 21 percent to $1.29 billion, while polished imports soared 228 percent to $517.29 million. Net polished imports — polished exports less imports — fell 15 percent to $775.7 million. January rough imports increased 9 percent to $891.89 million, and rough exports dropped 31 percent to $44.77 million. Net rough imports — rough imports less exports — rose 12 percent to $847.12 million in January.

Gold imports for India in January fell 91.9 percent to five tons due to price increases, according to the Bombay Bullion Association. Gold prices spiked in January, as a weak dollar and fears of a slowdown in the U.S. economy caused investors to turn to the metal as a safe haven. Consumers across India sold gold in local scrap markets, which diminished the need for jewelers to buy gold from outside the country, the Association found.


UAE Rough Diamond Trade Up

The United Arab Emirates (UAE) reported an increase in its rough diamond trade during 2007, having benefited from the rise in rough prices. Total trade for the year rose 23 percent to $4.8 billion, according to the Dubai Diamond Exchange (DDE). Rough diamond imports grew 28 percent to $2 billion, or 43.6 million carats.

Angola was the UAE’s largest supplier of rough, exporting $636 million there during the year, up 78 percent from 2006. The European Union (EU) was second, with exports to the UAE increasing 35 percent to $553 million. UAE rough exports grew 19 percent to 2.8 billion, but fell 5 percent by volume to 40.2 million carats, the DDE reported. The Emirates sold 11 percent more rough to the EU totaling $1.43 billion, while India was it second-largest market, growing 53 percent to $803.4 million.


Japan’s Polished Imports Down

Japan’s polished diamond imports fell 18.8 percent to $51.37 million in December, while volume declined 23 percent to 5,676,465 carats for the month. In 2007, the country’s polished imports fell 12.6 percent to $881.25 million, and volume decreased 11.2 to 104,083,068 carats. Imports from China increased 26.4 percent to $18.7 million and U.S. imports increased 8.5 percent to $36.9 million. India was the biggest source of polished goods to Japan despite a 12.9 percent decline in exports to $382.47 million.

Article from the Rapaport Magazine - March 2008. To subscribe click here.