Economic Bulletin

RAPAPORT... Consumer Confidence Grows

The Conference Board Consumer Confidence Index, which had improved slightly in July, made additional gains in August. The Index now stands at 56.9, up from 51.9 in July. The Present Situation Index decreased to 63.2 from 65.8, while the Expectations Index increased to 52.8 from 42.7. Lynn Franco, director of The Conference Board Consumer Research Center, noted that overall readings are still low by historical standards.

Consumers’ assessment of current conditions did not improve in August. Those stating business conditions are “bad” increased to 33.2 percent from 32.6 percent, but those claiming business conditions are “good” also edged up to 13.4 percent from 13.2 percent. Respondents describing jobs as “hard to get” rose to 32 percent from 30.2 percent, while those claiming jobs are “plentiful” declined to 13.1 percent from 13.6 percent.

Consumers expecting business conditions to worsen over the next six months decreased to 25.8 percent from 32.4 percent, while those expecting conditions to improve increased to 11.9 percent from 9.2 percent. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households.

Consumer Inflation Higher than Expected

U.S. government data revealed that consumer prices rose 0.8 percent in July, 0.4 percent more than anticipated. At the current pace, annual inflation rose at a rate of 5.6 percent, compared to 5 percent in June. However, core inflation grew only 0.3 percent in both June and July, excluding food and energy increases. This is the rate the Federal Reserve monitors closely as a basis for interest rate decisions. The annual rate for this index was up about 2.5 percent in July. The ranks of Americans receiving unemployment benefits swelled to 3.4 million, the highest level since November 2003.

Personal Income Shrinks

Personal incomes were virtually flat in June, the most recent reporting month, but after-tax incomes declined 2.6 percent when adjusted for inflation, compared to a jump of 5.2 percent in May, according to the U.S. Commerce Department. May’s increase was attributed to the government’s distribution of stimulus checks. The personal savings rate decreased to 2.5 percent of disposable personal income, compared to 4.9 percent in May. Consumer spending contracted 0.2 percent for the month when inflation was factored in, compared to a drop of 0.3 percent in May.

U.S. Polished Exports Hit New High

The U.S. exported more polished goods than it imported for the first time this June, with the likely cause being post-JCK show shipments out of the country. At $1.9 billion in June, polished exports have increased 48 percent since May, compared with a 34 percent rise from May to June in 2007. June’s polished exports set a record high, rising 70 percent compared to the prior year. Polished imports grew 21 percent to $1.6 billion compared with June 2007. Rough imports rose 36 percent to $94 million, while rough exports declined 40 percent to $21 million.

For the half year, polished imports increased 17 percent to $10.3 billion and polished exports soared 48 percent to $7.8 billion. Rough imports grew 6 percent to $449 million and rough exports dropped 15.3 percent to $211 million.

A surge in overall exports during the second quarter helped to boost the U.S.’s gross domestic product (GDP) 3.3 percent, which was higher than preliminary estimates of 1.9 percent. Overall exports grew 13.2 percent, but imports dropped 7.6 percent during the quarter. Consumer spending during July rose 0.2 percent. When adjusted for inflation, however, consumer spending was down 0.4 percent.

India’s Polished Imports Spike

India’s polished diamond imports grew 65 percent to $795.2 million in July, according to data published by the country’s Gem & Jewellery Export Promotion Council (GJEPC). Polished exports rose a more modest 22 percent to $1.3 billion during the month. Rough imports increased 6 percent to $1.1 billion and rough exports jumped 41 percent to $65 million. For the year to date, GJEPC reported that India’s polished exports grew 26 percent to $5.1 billion, while polished imports soared 96 percent to $2.6 billion. Rough imports increased 21 percent to $4.3 billion as rough exports climbed 81 percent to $316.9 million during the period.

Israel’s Polished Exports Increase

Israel posted a 28 percent increase in polished diamond exports in July at $821.5 million, according to the diamond controller’s office of the country’s Ministry of Industry, Trade and Labor. Polished imports rose 12 percent to $425.7 million. Rough diamond imports fell 5 percent to $468.2 million, while rough exports grew 17 percent to $312.7 million during the month.
During the first seven months of the year, polished exports increased 9 percent to $4.6 billion and polished imports jumped 18 percent to $2.8 billion. Rough imports increased 12 percent to $3.2 billion for the year to date, while rough exports rose 24 percent to $2.5 billion.

Japan’s Polished Imports Decline

Japan’s imports of polished diamonds fell 6.3 percent to $68.4 million in June 2008, according to figures compiled by The J Club, Inc. The nation’s imports from India fell 15.3 percent to $23.2 million, while those from Belgium rose 15.9 percent to $20.1 million. Imports from Israel grew 14.5 percent to $10.8 million. For the first half of the year, Japan’s total polished diamond imports fell 9.5 percent to $416.3 million.

South Africa’s Rough Exports Soar

South Africa’s rough diamond exports rose 40 percent to $212 million (ZAR 1.62 billion) in March 2008, according to data published by the country’s Department of Trade and Industry. Rough imports grew 7 percent to $83.7 million from last year. The country’s polished diamond exports increased 5 percent to $53.9 million and polished imports jumped 14 percent to $9.3 million from last March.

First-quarter rough exports grew 40 percent to $474.2 million, while rough imports rose 1 percent to $252.3 million. Polished exports increased 15 percent to $140.3 million for January through March and polished imports surged 52 percent to $34.2 million.

Dubai’s Rough Exports Up

Dubai’s rough diamond exports rose by 44 percent to $1.9 billion in the first half of 2008, according to the the Dubai Diamond Exchange (DDE). Approximately 87 percent of Dubai’s rough diamond exports went to countries in the European Union (EU) and India, while the country’s exports to China increased by 950 percent. Rough imports grew 23 percent to $1.2 billion, driven by a 75 percent increase in rough imported from Angola and a 138 percent increase in rough imports from China.

Belgium’s Exports Rise

Polished diamond exports from Belgium rose 33 percent to $1.5 billion in July 2008, according to the Antwerp World Diamond Centre (AWDC). Polished imports grew 19 percent to $940.4 million. Belgium’s July rough imports rose 29 percent to $1.1 billion as exports grew 4 percent to $1.2 billion. For the year to date, polished exports rose 25 percent to $8 billion and polished imports grew 27 percent to $7.4 billion. Rough imports were up 19 percent to $7 billion, while rough exports rose 10 percent to $7.5 billion from January through July.

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