Trade conditions remain positive in October

Wednesday, November 18, 2009

Pretoria - South Africa's trade conditions in October remained positive, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.

The Trade Activity Index (TAI), which reflects the current trade conditions, declined to 51 in October from 53 in September, said SACCI.

"This is only the second month since November 2007 that the TAI was in positive territory. The steady recovery in the index from a low of 32 in April 2009 was supported by the TAI remaining positive in October 2009.

The TAI is likely to maintain in positive levels in the short-term as the trade environment encourages greater activity over the festive season and into 2010," said the chamber.

In October, the sales and new orders sub-components of trade activity also slowed slightly in, but were still above the average level for 2009.

According to SACCI, the sub-index on sales volumes dipped by 4 points to 56 from 60 in September 2009 but was 11 points above the August level of 45. The new orders sub-index also slipped by 4 points in October 2009 and was well above the low of 34 in June.

However, the supplier deliveries index improved to 51 in October from the 49 recorded in September thereby indicating a further easing of supply conditions.

The marginal decrease in the inventory index to 48 in October 2009 is still a 10 point increase on August 2009 and further endorses improved trade conditions and the rebuilding of stock.

The index on selling prices decreased to 49 from 50 in September 2009 while the input price index decreased by two points to 52 in October 2009. "Inflationary pressures therefore appear to be easing after failing to find direction in the August 2009 Survey," said SACCI.

According to SACCI respondents to the survey continued to be optimistic notwithstanding the Trade Expectations Index (TEI) returning to 55 in October 2009 following the 59 of September 2009.

"The October TEI figure appears to be correcting an overly optimistic outlook but nonetheless remains in positive territory," said the chamber.

Sales expectations pulled back to 64 in October 2009 from 70 in September 2009 and remained in positive terrain. Expectations for new orders registered 58 from 63 in September 2009 and following a similar adjustment as other trade variables. The index on prospects for supplier deliveries remained virtually unchanged.

Although there is a positive outlook for trade conditions six months hence, inflationary expectations for the next six months (scope of survey) are growing, noted SACCI.

The indices on expected input prices remained unchanged and sales prices increased by three points to 59, the highest since the 60 of February 2009. The expected higher selling prices are partially the result of increased input costs (electricity tariffs, salaries, fuel price) and lower turnover volumes.

"Current employment conditions in the trade environment were unchanged in October at 45 for the employment index. Employment prospects, however, declined to 45 from 48 in September 2009 but remained well removed from the low of 39 in February 2009," said SACCI.

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