July trade conditions show signs of recovery

Wednesday, August 12, 2009

Pretoria - The South African Chamber of Commerce and Industry's (Sacci) July trade conditions survey released on Wednesday showed signs of recovery to the economy.

According to Sacci, the Trade Activity Index (TAI) reflects current trade conditions improved to 42 in July in comparison to June's 39 points measurement.

"Although trade conditions remained in negative territory ... below 50 index points, it is the highest level this year and the highest since the 46 of October 2008. The gradual recovery in the index from the low of 32 in April 2009 received further support," said Sacci in a statement.

Sales and new orders sub components of trade activity were higher than the May and June levels.

The sub-index on current sales volumes increased by 5 points to 47 points in July while the new orders sub-index, that gained 9 points in May and lost 4 points in June 2009, recovered to 42 in July, the best level this year. 

Also, supplier deliveries dipped slightly to 39 in July 2009 from 41 points in June 2009 thereby confirming improved demand. 

According to Sacci, selling prices increased slightly with the index increasing to 51 from 50. The input price index decreased marginally by 3 points to 59 points.

"Inflationary pressures appear to be contained as the prices of imported producer goods declined by nearly 18 percent year-on-year in June 2009 and the prices of locally produced goods declined by 4.1 percent year on year in June."

Sacci further added that the Trade Expectations Index (TEI) showed that its respondents were much more optimistic in their six month outlook at 56 points compared to 49 points in June.

"The TEI has been trending upward since March 2009 and the July 2009 figure is the highest since the 56 of August 2008."

Sales expectations for July improved by nine points to 65 points compared to 56 points recorded in June.

"Although there is a more positive outlook for most aspects of trade conditions six months ahead, inflationary expectations rose for the next six months as the indices on expected input and sales prices both increased by one and four points respectively. 

"Upward pressure on inflation is further brought about by some administered price adjustments announced in June 2009, a higher crude oil price, a weaker rand and increasing wage levels," said SACCI.

It further said that current employment conditions in the trade environment improved slightly and the employment index rose by three points to 41 points in July while employment prospects also increased to 46 from 41 points recorded in June after many months of being tentative about improvement.