South Africa: Trade conditions still tight, but improving – Sacci
Trade levels continued to reflect tight trade conditions, despite the South African Chamber of Commerce and Industry's (Sacci's) Trade Activity Index indicating a climb to 43 points in July, up one point from the 42 points registered in June.
Trade activity had reached an all-time low in June, after the index had started a steady decline from 50 points in February.
Similarly, a subindex on sales volumes had also improved slightly to 45 points in July, up from 42 points in June, but still down from the 55 points recorded in February.
Sacci said in a media release on Friday that the new orders subindex had also confirmed a slightly improved mood in a depressed trade climate, increasing to 42 points in July, compared with 40 points in June.
Further, the Trade Expectations Index (TEI), which explores trade conditions six months ahead, had increased to 50 points in July, after it had gradually declined from 58 points in February to 46 points in June.
The TEI had previously been in a rapid downward trend, declining from 70 points in January 2007 to 46 points in May and June this year.
This implied somewhat better trade prospects towards the year end, with salary increases for public servants in July and wage settlements in excess of 10% having contributed to a better-off feeling among some consumers, which lead to a possible improvement in retail trade in July, Sacci said in the release.
In addition, the chamber expected trade conditions to level out further if financial conditions and cost pressures did not tighten further, and although trade prospects could remain subdued over the short term, an improvement in the medium to long term was possible.
Meanwhile, the TEI subindex on sales expectations had increased to 56 points in July, up from 51 points in June and 52 points in May. The index on expected new orders had also improved by five index points to 51 in July, compared with 46 points recorded in May and June.
Sacci noted that inflationary pressures had eased as the index on selling prices had declined to 68 points in July, down from 74 points in June. The input price index had declined to 81 points in July, compared with 84 points in June.
Further, the expected input and sales price indices had remained the same, which Sacci said suggested that rising prices would still be a strong possibility over the next six months, as fuel and food prices, although rising at a slower pace, were increasing faster than average inflation.
In addition, the employment index remained on 44 points in July, while employment prospects in the trade environment had increased to 46 points in July, and although this was up from the 45 points recorded in June, it remained in negative territory.
