Trade conditions continue to improve

Wednesday, March 10, 2010

Pretoria - The Trade Conditions Survey for February continued on its improved trait rising to 54 points.

The South African Chamber of Commerce and Industry (SACCI) on Wednesday said the Trade Activity Index (TAI) which reflects current trade conditions, improved to 54 points compared to December 2009's 42 and January's 44.

"It is 13 points higher than a year ago. Sales and new orders were mainly responsible for the positive trade conditions as reflected by the TAI in February," said the Chamber.

The sub-index on sales volumes increased by 15 index points in February, this after it declined by 14 index points to 45 in December. It improved to 46 points in January this year.

The new orders index improved by eight points to 55 in February while the supplier deliveries also improved by eight points to 50 in February.

The inventory index increased marginally to 47 in February. This suggests that re-stocking may have slowed given the uncertainty about the strength of the economic recovery over the medium term.

The index on selling prices rose to 54 in February from 51 in January 2010. The input price index also increased by three points to 61 in February.

"This indicates that inflationary pressures are mounting particularly from input costs including the diesel price, which is now 15.1 percent higher than a year ago. Substantial direct and indirect electricity cost impacts will add to inflationary pressure in months to come," said SACCI.

The chamber said that looking six months ahead respondents remain optimistic. Additionally the Trade Expectations Index (TEI) stayed on a high level of 68 in February 2010 after measuring 67 points in January 2010. This positive outlook factors in the impact of the 2010 FIFA World Cup as well as anticipated stronger economic recovery in the second half of the year, said SACCI.

Sales expectations gained one point in February from the 76 recorded in January 2010 while expectations for new orders registered 70 which was slightly lower than the 72 recorded in January.

Meanwhile, indices on expected selling and input prices for January 2010 suggest that inflationary expectations declined in February 2010. The input price expectations index declined by two index points to 70 while the selling price expectations index declined by one point to 67 in February.

"Current employment conditions in the trade environment improved strongly in February 2010 as trade conditions, especially sales, increased considerably. The index rose by 7 points to 48 in February - suggesting fewer lay-offs.

"The employment prospects index increased to 57 in February after measuring 55 in January 2010. The index is well into positive territory for the fourth time since November 2009 and supports greater employment opportunities in the trade sector over the medium term," said SACCI.

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