Pretoria - Trade conditions recovered in August but they remain in negative territory, the South African Chamber of Commerce and Industry (SACCI) said.
In its monthly Trade Conditions Survey released on Tuesday, SACCI said current trade conditions, as reflected by the Trade Activity Index (TAI), recovered to a seasonally adjusted 48 from the sharp dip of 38 in July.
On an unadjusted basis, the TAI was in negative territory since April 2011 and is seven points below the last positive reading in March 2011.
"Trade conditions improved on the levels of June and July 2011 but remained in negative territory. The sharp decline was partly caused by the disruptions following strikes in July 2011," said SACCI.
According to the survey, the sales volumes index recovered to 53 after a reading of 39 in July. All components of trade activity performed better than in July. The input price index decreased by three index points in August 2011, after increasing by six points to 66 in July 2011.
Meanwhile, the sales price index is unchanged at 56 for three consecutive months, after falling from 58 in May 2011.
"Inflationary pressures currently appear to be contained although operating costs are still vulnerable to higher prices of imported goods, utility services and labour costs," noted SACCI.
The recent strike season had a negative impact on employment conditions, with the index on employment in the trade environment dipping to 42 in July and only partially recovering to 45 in August 2011, while the employment prospects index also remained in negative territory at 49 in August 2011.
"Given the uncertain businesses and economic climate, the trade sector finds it difficult to accommodate above-inflation wage settlements while maintaining the current size of the workforce. The potential implications for employment in the broader economy remain concerning."
In August, expectations in the trade environment recovered. The TEI (Trade Expectations Index) registered 57 - still eight points below the high of February 2011 level but five points better than in July 2011. SACCI noted that the trend toward negative territory seems to have abated, while the outlook for all elements of the trade expectations survey improved.
The index on sales expectations increased to 64 from 58 points in July, while the expected new orders index increased by 6 points. The expected supplier index marginally improved to 55 after increasing to 54 in July 2011 indicating stable supply conditions.
The sales and input price expectations indices rose by three points each to 65 and 69. This reflected higher inflationary expectations by most respondents. Rising costs such as fuel and other utility services are expected to continually put trade margins under pressure.
"Although marginally improved from July to August, SACCI remains concerned about the weak performance in the trade environment and the implications of such performance for the broader economy and for the 2012 outlook." - BuaNews
