Trade conditions in negative territory in October

Wednesday, November 9, 2011

Pretoria - Trade conditions in October remained in negative territory, the South African Chamber of Commerce and Industry (SACCI) said.

In releasing its monthly trade conditions survey -- which is conducted to reflect business's view on trade conditions in South Africa -- on Wednesday, SACCI said that in October, price pressures increased notably and probably played a role in trade conditions remaining negative.

The trade activity index (TAI) that measures present trade conditions recovered to a seasonally adjusted 48 in October, this after losing 3 points in September. Meanwhile the sales volumes index improved to 52 after dropping four points in September.

"This level may be contextualised against the 2011 high of 62 in February 2011 and the 58 of October a year ago. All the other components of trade activity increased in October 2011 by an average of 4 points," said SACCI.

The index on employment improved by one point to 48 and remained in negative territory.

The Trade expectations index (TEI) remained unchanged at 55 and below the average of 60 for the first few months of the year. The outlook for sales, new orders and backlog on orders was slightly lower than in September.

Employment prospects improved to 52 from 49 in September while supplier deliveries improved slightly as the index increased by 3 points to 55 in October.

SACCI said current sales prices increased by 5 points to reach 61 while input prices increased by seven index points to 74 in October with the six month outlook for sales prices increasing continually from July's 62 to 70 in October.

Input price expectations increased by 11 points from July to 77 in October with pressure on input prices expected to increase markedly in the coming months. "Inflationary pressures will become more widespread as the prices of basic inputs such as fuel and public utility services and labour costs increase much faster than general prices."

The chamber said inflation can no longer be contained in the business environment.

"As the rand continues to test R8 to the US dollar, it will also adversely impact cost structures," noted SACCI.