(IDEX Online News) – Specialty jewelers in the U.S. were the losers in July:  their sales barely inched up from the same period a year ago. Further, American’s demand for jewelry remained tepid in July, continuing a string of weak monthly sales reports from specialty jewelers and other multi-line merchants who sell jewelry.

 

The full analysis and statistics on jewelry industry inflation for July 2012 is available to IDEX Online Research subscribers and IDEX Online members here.

 

Total jewelry sales rose by just under 4 percent in July, somewhat below June’s revised 4 percent gain. These monthly gains were far below last year’s near record growth of 11 percent for the twelve months of 2011, and they illustrate the slowing pace of jewelry industry sales in the American market. Jewelry demand in the U.S. market has been softening since the beginning of the year.

 

Uncertain American consumers have continued to keep a tight rein on their jewelry spending this year. Unfortunately, shoppers’ uncertainty – and the resulting spending restraint – is not likely to change any time soon. The uncertainties, which won’t be resolved quickly, include the outcome of the presidential election in November, the faltering U.S. and global economy, languishing home prices, and yo-yo gasoline prices.

 

There is only one reasonably bright spot:  we have not changed our jewelry sales forecast for the full year of 2012 – in the range of a 4 percent gain for the U.S. market versus 2011.

 

HIGHLIGHTS: July Jewelry Sales Muted

Consumer demand trends for jewelry in the American market are as follows:

 

·        Fine jewelry and watch sales were stronger than total retail sales (excluding automobiles) as well as total retail sales gains including the highly volatile automobile category.

 

·        Demand for fine jewelry outpaced demand for fine watches. Some of this is related to price inflation of components used in jewelry.

 

·        Specialty jewelers lost market share to multi-line merchants who sell jewelry. July is often a slow month for specialty jewelers, with mall traffic down due to summer vacations.

 

DEMAND For Jewelry:  Sales Slowing

Jewelry sales in the U.S. market have been on a downward slope since the end of 2011. Last year’s gain of 11 percent (2011 versus 2010 jewelry sales) was fueled largely by price inflation of diamonds and precious metals. This year, inflation has been much more moderate and generally stable. As a result, 2012s jewelry sales gains in the U.S. are more in line with historic annual increases in the low to mid single digit range.

 

The graph below summarizes total jewelry sales gains by month for the past 15 months.

Source: US Dept of Commerce

 

 The following table summarizes full data about retail and jewelry sales in July 2012.

Source: US Dept of Commerce & LGI Group

 

Outlook:  Moderate Gains

Jewelry sales in the U.S. market correlate closely to economic growth. After a solid recovery in 2011 – culminating with economic growth of 4.1 percent in the fourth quarter of 2011 – America’s economy posted a weak 2.0 percent gain in the first quarter and an even weaker 1.7 (revised) percent gain in the second quarter. Hence, it should be no surprise that jewelry sales have weakened so far this year.

 

We continue to forecast that sales of fine jewelry and watches will rise by about 4 percent in 2012, when compared to 2011. While the percentage gain is modest, 2012 will be a record year for the American jewelry industry.

 

A reminder:  U.S. Gross Domestic Product (GDP) trends show the closest correlation to jewelry sales, and no other factor – unemployment, interest rates, savings rate, stock market performance – shows a closer correlation. The oft-quoted consumer confidence indices show almost no correlation – either direct or inverse – to jewelry sales trends, and for this reason we do not report it, nor is it a factor in our forecast equations.

The full analysis and statistics on jewelry industry inflation for July 2012 is available to IDEX Online Research subscribers and IDEX Online members here. Click here for more information on how to subscribe or become a member.