Economic Bulletin

April

By Rapaport

RAPAPORT... Consumer Confidence Declines

The Conference Board’s Consumer Confidence Index retreated 4 points in March 2007 and now stands at 107.2 (1985=100), down from 111.2 in February. The monthly survey’s data is derived from a representative sample of 5,000 United States households.

“Apprehension about the short-term future has suddenly cast a cloud over consumers’ confidence,” noted Lynn Franco, director of The Conference Board’s consumer research center. However, “despite diminishing expectations, consumers’ assessment of present-day conditions remains steady and does not suggest a weakening in economic conditions.

“The recent turmoil in financial markets coupled with the run-up in gasoline prices may have contributed to consumers’ heightened sense of uncertainty and concern,” she added. “The direction of both components over the next few months bears watching to determine whether this decline is just a bump in the road or something more substantial.”

U.S. Polished Exports Surge

The value of polished diamond imports into the United States climbed 13 percent to $1.44 billion in January 2007. Polished diamond exports out of the U.S. also increased 13 percent, to $790 million, the third-highest monthly total to date, with the average unit price received rising 20 percent to $1,225 per carat. Meantime, the U.S. industry’s rough diamond imports and rough diamond exports jumped 22 percent and 76 percent, to $61 million and $51 million, respectively. Comparisons are with January 2006.

Israel Polished Exports Steady

The value of Israel’s polished diamond exports in February 2007 totaled $622 million, slightly above — by 1 percent — the level reached in February 2006. In addition, the Israel diamond industry’s polished imports increased 7 percent to $339 million, its rough diamond imports rose 5 percent to $454 million and rough diamond exports surged 33 percent to $311 million, all based on the same year-on-year comparison.

Belgium Polished Exports Rise

Polished diamond exports out of Belgium were up 7.3 percent in February 2007 for a total of $859.7 million and polished diamond imports rose 4.2 percent to $712.4 million, according to the Antwerp World Diamond Centre (AWDC). The value of the Belgium diamond sector’s rough imports and rough diamond exports also grew — by 15.4 percent to $910.4 million and 7 percent to $936.9 million, respectively. Comparisons are with February 2006.

Japan’s Import Slide Continues

Polished diamond imports into Japan were 24 percent lower in January 2007 at $82.9 million, the sixth consecutive month that the value of the Japanese diamond industry’s polished imports has fallen. On the other hand, its gold jewelry imports increased 10 percent during the month to $67 million. Comparisons are with January 2006.

H.K. Jewelry Exports Expand

Hong Kong’s Trade Development Council reported that the value of fine jewelry exports grew 13.7 percent in 2006 to $3.7 billion. Charles Chan, the council’s jewelry advisor committee chairman, released the figures during the recent Hong Kong International Jewellery Show. Chan added that fine jewelry exports from Hong Kong to the United States, the United Kingdom, France, mainland China, India and Russia were higher for the year in all cases. Year-on-year growth rates for exports to these countries were 7 percent, 11 percent, 32 percent, 47 percent, 83 percent and 209 percent, respectively.

Dubai Diamond Trade Up

The value of rough diamond imports and exports trade through the Dubai Diamond Exchange (DDE), a subsidiary of the Dubai Multi Commodities Centre (DMCC), rose by an overall 5.2 percent in 2006 to $3.93 billion, with rough imports up 5.1 percent to $1.56 billion and rough exports up 5.4 percent to $2.37 billion. In terms of quantities, Dubai’s rough imports increased 15 percent for the year to 43 million carats and rough exports rose 23 percent to 42 million carats. Comparisons are with 2005.

U.S. Growth Overestimated

After having made an initial estimate of 3.5 percent for fourth-quarter economic growth in the United States, the U.S. Commerce Department subsequently drastically reduced its gross domestic product growth figure to 2.2 percent. Consequently, economic growth for the full 12 months of 2006 was revised downwards to 3.1 percent.

The department claimed that businesses in the U.S. had tightened their belts much more than originally thought, having initially concluded that 2006 had produced annual growth of 3.4 percent thanks mainly to a strong fourth quarter. “A revision of 1.3 percentage points or larger [for a quarter] has occurred only seven times in 30 years,” the government noted. Economists are predicting growth rates of about 2.5 percent for both the first and second quarters of 2007 and 2.9 percent for both the third and fourth quarters.

ALROSA Sells Rough At H.K. Show

ALROSA sold almost 4,500 carats of rough at the recent Hong Kong International Jewellery Show for $4.8 million, and an additional $1.3 million worth of polished goods, the company reported. A total of 29 lots of rough were offered and purchased, and sizes of stones ranged between 5 carats and 10 carats. The largest polished diamond bought was 23 carats. It was ALROSA’s first auction at the event.

Meanwhile, ALROSA’s twenty-first international diamond auction, held in Moscow in late March, generated about $18 million in rough sales. The parcels sold comprised 529 diamonds weighing more than 9,000 carats in total, with seven diamonds of more than 50 carats each. The largest diamond offered weighed 115.59 carats. Representatives from 54 companies from Russia, India, Israel, Belgium, China, the United States and Lebanon attended the auction.

China, Africa Trade Swells

China’s trade with African nations swelled 30 percent to $56 billion in 2006, the fifth consecutive year of similar growth rates. Some $27 billion in goods were exported from China to the African continent, while goods from Africa to China surged 37 percent to $29 billion. Wei Jianguo, China’s vice minister of commerce, said that consumers from his homeland are demanding more diamonds from southern Africa, marble from Egypt, sesame from Ethiopia, coffee from Uganda, lumber from Gabon and tobacco from Zimbabwe.

Price Boosts China Gold Output

China’s total gold output for 2006 of 240 tonnes equated to a production gain of 7.15 tonnes or 3 percent versus the previous year, based on figures released by the country’s National Development and Reform Commission (NDRC). However, thanks to higher gold prices, the value of China’s gold output soared 34 percent to $6.6 billion in 2006. According to the NDRC, China hopes to lift gold production by 8 percent in 2007 to 260 tonnes.

Gem Lists On London Bourse

Gem Diamonds, founded in 2005 by Harry Oppenheimer’s right-hand man Clifford Elphick, recently listed on the London Stock Exchange. The mining company raised about $580 million in equity to fund selected development projects and mines in central Africa. In July 2006, Gem bought the Letseng mine in Lesotho. Elphick, currently Gem’s chairman and chief executive officer, has a roughly 25-percent stake in the company, which is pursuing interests in Lesotho, the Democratic Republic of the Congo, the Central African Republic and Angola.

Date	Gold London PM	Platinum PM	Silver
2/23/07	683.00	1234.00	14.280
2/26/07	685.75	1236.00	14.580
2/27/07	676.20	1230.00	14.490
2/28/07	664.20	1239.00	14.310
3/1/07	670.00	1248.00	14.290
3/2/07	651.90	1203.00	13.530
3/5/07	636.75	1165.00	12.605
3/6/07	643.75	1190.00	12.935
3/7/07	646.40	1186.00	12.890
3/8/07	654.25	1195.00	13.090
3/9/07	625.25	1203.00	13.070
3/12/07	647.75	1203.00	12.970
3/13/07	650.80	1220.00	12.920
3/14/07	643.25	1203.00	12.650
3/15/07	648.50	1215.00	12.900
3/16/07	653.20	1219.00	13.070
3/19/07	655.00	1226.00	13.160
3/20/07	659.00	1231.00	13.250
3/21/07	658.75	1232.00	13.330
3/22/07	663.00	1236.00	13.375
3/23/07	656.25	1232.00	13.370
3/26/07	663.00	1237.00	13.260
3/27/07	664.00	1239.00	13.340
3/28/07	666.75	1246.00	13.360