(IDEX Online News) – Uncertain American consumers kept a tight rein on their jewelry spending in June. Total jewelry sales rose by just over 3 percent for the month, far below last year’s torrid pace of an 11 percent gain and well below the 5 percent year-to-date increase in jewelry expenditures.

 

Jewelry demand in the U.S. market has been slowing since the beginning of the year.

 

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

 

Shoppers’ uncertainty – and the resulting spending restraint – is not likely to change any time soon. Those 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 a yo-yo stock market.

 

While we have not officially changed our jewelry sales forecast for the year – in the range of a 4 percent gain for the U.S. market – it feels a little aggressive, though we are only half way through the year.

 

Highlights: June Jewelry Sales Muted

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

 

·        Retail demand in June was muted, for both jewelry and all retail merchandise. Consumers kept their purse strings tight during the month.

 

·        Fine jewelry and watch sales were stronger than total retail sales (ex-automobiles), but were about even with 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 took market share from multi-line merchants who sell jewelry. Multi-line jewelers were promoting broader merchandise categories – apparel, seasonal hardlines and other goods – that could provide a major boost to sales. As a result, they did not focus on jewelry, a relatively modest category in their stores.

 

·        High-end jewelry and watches showed stronger demand than popular-priced merchandise.

 

·        Our jewelry and watch sales forecast remains unchanged, but bias is toward weaker trends.

 

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, 2012’s jewelry sales gains in America 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: Dept of Commerce

 

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

Source: Dept of Commerce & LGI Network

 

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 1.5 percent gain in the second quarter. Hence, it should be no surprise that jewelry sales have weakened so far this year.

 

A reminder to those who follow IDEX Online Research regularly: 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 June 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.