A good deal of the renewed activity is coming from the upper end of the market, where more affluent consumer are now ready to flex their financial muscles, while the less wealthy are still likely to be feeling lingering economic effects of the COVID crisis.
In a recent article, in which the Washington Post reported the pandemic recession largely bypassed white-collar workers, the newspaper noted that Americans were able to save an estimated $2.5 trillion more than usual, according to the Federal Reserve Bank of New York. The wealthiest 10 percent of U.S. citizens added more than $8 trillion to their net worth. This has fueled increased spending on luxury products.
The carefully followed U.S.-based Conference Board Consumer Confidence confirmed the general sense of optimism in the U.S. marketplace. It improved further in June, following gains in each of the previous four months. The June index stood at 127.3, up from 120.0 in May.
The Conference Board’s Present Situation Index—based on consumers’ assessment of current business and labor market conditions—rose from 148.7 in May to 157.7 in June. Its Expectations Index—based on consumers’ short-term outlook for income, business, and labor market conditions—improved to 107.0, up from 100.9.
“Consumer confidence increased in June and is currently at its highest level since the onset of the pandemic’s first surge in March 2020,” said Lynn Franco, Senior Director of Economic Indicators at The Conference Board. “Consumers’ assessment of current conditions improved again, suggesting economic growth has strengthened further in Q2. Consumers’ short-term optimism rebounded, buoyed by expectations that business conditions and their own financial prospects will continue improving in the months ahead.”
KNOCK-ON EFFECT ON DIAMONDS
This readiness to spend appears to be having a knock-on effect in the diamond industry. Israel’s Ministry of Economy and Industry has reported that net polished diamond exports increased 75 percent year on year in June to $289.7 million, while in terms of volume they rose 66 percent to 125,119 carats.
“Since Israel is an important part of the global diamond and jewelry industries, which are experiencing a strong recovery, as long as this trend will continue globally, I believe Israel will continue to enjoy it,” stated Ophir Gore, the country’s Controller of Diamonds.
Israeli imports of polished diamonds rose from $93 million in June 2020 to $253.3 million this year. Rough imports stood at $247.3 million, up from $64.5 million during the same month a year earlier.
During the first half of 2021, net polished diamond exports were up 69 percent year on year to $1.71 billion, while rough imports rose by 165 percent.
The Israel Diamond Exchange complex in Ramat Gan. During the first half of 2021, net polished diamond exports from the country were up 69 percent year on year.
The Shanghai Diamond Exchange building. Net polished imports into China during the first half were higher than the amount registered in all of 2020 and 49 percent higher than during the first half of 2019.
2021 LIKELY TO OUTPACE 2019
The news was also upbeat in China, which after the United States is the world’s largest diamond market.
According to the Shanghai Diamond Exchange, net polished imports during the first half of the year equaled $1.58 billion, higher than the amount registered in all of 2020 and 49 percent higher than during the same period in 2019.
“With the COVID-19 pandemic effectively under control in China, the diamond import of the country has registered a hefty bounce in the first half year of 2021 after the gloomy market situation in the first half of 2020 followed by the recovery period in the second half,” the bourse said in a statement. “The surge in trading provides the clarity that China’s diamond market is walking out of the haze of the pandemic and returning to a normal growth track.”
According to bourse predictions, diamond import imports into China will surpass 2019 “significantly” and will shatter the previous record of $2.78 billion set in 2018.
As China’s economy is estimated to maintain what in that market is considered moderate growth of 5 percent to 6 percent over the next few years, “in the coming future, the diamond market will be most likely to achieve another decade of desirable growth,” the bourse said in its statement.