Last week, I came across some welcome news: Following eight months of declines, sales at specialty jewelers rose by 7.7 percent in June year-on-year, according to the Commerce Department.
You can see the stats here: Nonseasonally adjusted jewerly-store sales in June came in at $2.33 billion, compared to $2.16 billion in 2014. That’s good news, considering that the government’s jewelry-store numbers have declined since October 2014.
As Jewelers Board of Trade’s Dione Kenyon told me, it’s easy to understand why sales have dropped, given that the cost of jewelry materials, particularly gold, silver, and platinum, has fallen. That 7.7 percent jump is harder to explain. Most people I talked to seemed baffled by it, a stark sign of the trade’s pervasive pessimism.
You could make a case for some kind of increase. June is wedding season, and while the overall marriage rate has dropped, the number of weddings is projected to increase this year, as more members of the echo boom, or millennials, reach marrying age. The Supreme Court’s decision on same-sex marriage was handed down on June 26—too late to move the needle in a meaningful way, perhaps—and there is debate as to how much same-sex marriage will help the industry regardless.
But if you want to poke holes in that data, you can do that, too. The Commerce Department frequently revises its retail sales data as more info comes in. While economists and financial markets keep a close eye on its stats, some are skeptical, given the advanced retail sales number polls only a small group of retailers (5,000), and the standard revised survey tallies only 12,000. The specialty jeweler data is a small subset of that small subset—so much so that “jewelry store” stats are not released with the main numbers; one has to search for them amid the “underlying detail.”
Other government stats paint a more mixed picture. According to the Commerce Department, figures for jewelry and watch sales fell in June (see the data here). That number has also dropped or stayed flat since October 2014. That figure does not necessarily coincide with the jewelry-store number, considering the former measures jewelry sales at all retailers (including department stores), while the latter just tallies sales at jewelers. Still, they have mostly tracked each over the last year, with both generally dropping. Now they seem to be headed in opposite directions.
Of course, those jewelry and watch sales numbers are also frequently revised. The posted number is also seasonally adjusted, so it stays relatively constant through the year. Unfortunately, the Commerce Department doesn’t provide the “unadjusted” (and presumably more accurate) numbers. Stats gurus such as Ken Gassman, who has looked at this as much as anyone, uses a Commerce Department formula to “unadjust” them.
Last night, I called the Bureau of Economic Analysis (BEA) to understand more about how the jewelry and watch sales numbers are derived. The person I spoke with was extremely helpful, though I didn’t gain much confidence in the numbers. The number is calculated with a complex series of algorithms, and the sales reports it receives are often not broken down by category. Instead, the BEA calculates them based on how much a retailer generally sells of a certain product. Other data points factor in, he said, but that’s the gist.
Now that I’ve taken a closer look at it all, it’s clearer why we are seeing so many divergences in numbers: For instance, while the Commerce Department has been recording drops in jewelry sales, MasterCard SpendingPulse, which is calculated using credit card data, has generally reported that jewelry sales have gone up. When Michelle Graff looked into that issue, she found it’s possible that both are right, as more jewelers are favoring in-house credit. But SpendingPulse uses a proprietary algorithm to get its numbers, so you can’t be sure.
For all this, these numbers remain useful indicators, which is why publications like ours keeping printing them, alongside numbers from sources such as De Beers and the World Gold Council. Still, it’s important to keep all these provisos in mind. The falling Commerce Department numbers have fueled some of the gloom in the trade recently. The good news is that, at least for the moment, those numbers have changed direction. Considering all we’ve heard lately, I’ll take it.