U.S. Retail Sales Remain Cautious
April 20, 2015
The government figures reflect consumer caution throughout the retail sector, with electronics down 5% and durable goods falling 2.4%.
Jewellery unit sales, however, were higher than the value numbers indicate due to declines in the price of gold and diamonds from early 2014, coupled with down-trading in diamond quality.
Consumer confidence, which rose several points in March, has improved along with the economy, but economists say wages have not risen in tandem and the lower prices for petrol and oil have not spurred retail sales in other areas.
De Beers’ Diamond Insight Report, issued last month, reported that growth of diamond jewellery sales in the U.S. was up 7% by value for 2014. This is more than double other estimates that pegged U.S. diamond jewellery sales from flat to up by 3%. The report also estimated Chinese growth at 6% and Indian rupee growth at 3% (down 1% when measured in U.S. dollars). The report cited a positive outlook for 2015, despite some headwinds.
The 23-27 March De Beers sight was especially large – $690 million (£462 million) − with as much as $100 million (£67 million) in additional goods available from client refusals of boxes at the January and February sights. Clients refused 30-40% of the rough boxes on offer this month – the highest percentage since the economic crisis of 2009-2010 – because of price and inventory issues. De Beers held firm on prices across the board, even as rough prices exceed the cost of polished for many categories. Polished prices have declined by an average of 7% since last autumn according to several price reports, while polished inventories continue to rise.
AUCTIONS: The first major jewellery auctions of 2015 continued the trend of subdued demand for ultra-luxury items noted at last month’s BaselWorld fair.
Only 67% of Sotheby’s 6 April Magnificent Jewels and Jadeite auction in Hong Kong sold (compared to 85% to 90% for such sales in the past three years), with private buyers taking all but two of the top 10 pieces. Without aggressive buying from dealers, prices seem to have receded from last year’s highs at this sale, but comparisons are often difficult because the unique properties some pieces have make them more desirable.
One price record was set at Christie’s 14 April New York auction: $5.1 million (£3.4 million) from a private Asian buyer for a four-strand natural pearl necklace with pearls that ranged between 4.90 mm to 12.65 mm in size. Other prices, however, were down from the peaks of 2013-2014, including a 25.49 carat (ct.) D potentially Flawless diamond by Graff that brought $134,000 (£90,000) per carat for a total of $3.4 million (£2.28 million). This was about $50,000 (£34,000) to $60,000 (£40,000) per carat less than what similar goods achieved in previous sales. A 5.29 ct. Fancy Intense purplish pink diamond brought $1.1 million (£736,000) per carat, which was significantly lower than that achieved by similar stones auctioned during the past three years.
The Christie’s New York sale was 77% sold by value, again somewhat lower than recent years’ auctions.
At Sotheby’s New York 21 April auction a GIA-graded 100.20 ct. D IF Type II diamond was expected to sell for $19 (£12.7) to $25 million (£16.7 million). Christie’s will offer a 5.18 ct. GIA-graded Fancy Vivid pink diamond at its 13 May Geneva sale. That lot is expected to sell for $9.5 (£6.4) to $12 million (£8 million).
About the Author
Russell Shor is senior industry analyst at GIA in Carlsbad.