As we know now, COVID-19 did not dampen the consumers’ desire for diamonds during the festive period, and things continued to improve after then, despite the third COVID wave and thereafter the fourth. The question now is whether this ongoing rally can be sustained, with the roll-in to holiday season 2021 having just begun.
Right now, the signs are good. According to the Rapaport news service reporting after the JCK Show in Las Vegas, which uncharacteristically was held at the end of August rather than at the beginning of June, diamond prices were stable during the month leading up to the show, which is traditionally a slower period for the trade.
The RapNet Diamond Index for 1-carat diamonds edged up by a nominal 0.1 percent during August, but had increased by 11.3 percent since the beginning of the year.
AN OUT OF THE ORDINARY AUGUST
It was an unusual August this year, with JCK Las Vegas coming on the heels of a period during which the diamond bourses in the major trading centers are typically on hiatus, and trading slows – not for financial reasons but more because most dealers are on a beach somewhere, rather than in their offices.
Visitor traffic and exhibitor numbers were lower than than usual, to some degree because of the late date, but most probably more because of COVID’s Delta variant and a reluctance to travel and gather indoors. But, as Rapaport noted, those who did attend the show reported doing good business.
Upbeat activity at the Las Vegas shows reflected the robust U.S. market that has been driving demand, Rapaport said, adding that retail jewelers are having a strong year, spurring optimism across the pipeline.
Indeed, with a year characterized by disruption in the supply chain, many popular items were scarce, with buyers are struggling to find the right goods at profitable prices.
Inventory levels are rising, Rapaport noted, but they but include a growing percentage of stones with black inclusions, milky hues or medium to strong fluorescence.
Supply shortages will likely remain an issue at least until November, Rapaport said, as jewelers and dealers prepare for the holiday season.
“While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead,” said Lyn Franco, the Conference Board’s Senior Director of Economic Indicators.
DELTA VARIANT KEEPS CONSUMERS FEELING EDGY
Interestingly, the closely watched Conference Board Consumer Confidence Index declined in August, following a decrease in July. At the beginning of September, it stood at 113.8 down from 125.1 in July.
The Conference Board’s Present Situation Index, which is based on U.S. consumers’ assessment of current business and labor market conditions, fell to 147.3 in August from 157.2 in July. The
“Consumer confidence retreated in August to its lowest level since February 2021,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Concerns about the Delta variant—and, to a lesser degree, rising gas and food prices—resulted in a less favorable view of current economic conditions and short-term growth prospects.
But Franco added, “While the resurgence of COVID-19 and inflation concerns have dampened confidence, it is too soon to conclude this decline will result in consumers significantly curtailing their spending in the months ahead.”
The jewelry industry appears to be betting that they won’t.