Trade conditions volatile in July

Tuesday, August 14, 2012

Pretoria - Trade conditions remained volatile in July, the South African Chamber of Commerce and Industry (Sacci) said on Tuesday.

Releasing the Trade Conditions Survey, Sacci said trade conditions were tighter since April 2012 after being more robust at the beginning of 2012.

In July, the seasonally adjusted Trade Activity Index (TAI) lost a further four points to measure 45, which is down from a high of 59 in March.

"Trade conditions are characterised by volatility ranging from optimism to negativity as data reflects an uncertain economic environment - notably with sales and new orders," said Sacci.

After recovering strongly to 64 and 58 respectively in May, sales and new orders declined to 51 in June for each index and then to 45 each in July.

The inventories index decreased to 45 from 50 in June while the supplier deliveries index declined to 42 from 44.

According to Sacci sales and input prices appear to be picking up as the sales price index rose to 57 from 55 while the input price index increased to 66 from 63 in June.

"Although price pressures were easing over the last four months, the cost pressures of especially administered prices are coming through despite weaker trade conditions that make it difficult to pass on rising costs."

Administered prices rose by an average of 10% over the last year. Trade expectations (TEI) for the next six months have deteriorated as the expectations are focusing beyond the next festive season.

The TEI tapered off to 54 in July, the lowest level this year. It had increased to 61 in June from 57 in May.

"The continuing uncertainty and expectations of a low performing economic environment will continue to weigh negatively on the trade outlook in the coming months," explained Sacci.

The six month outlook for the key components of trade activity also reflected volatile trade conditions. After picking up in June, the sales and new order expectations indices decreased to 62 and 57 in July from 73 and 65 respectively.

Employment conditions in the trade environment remained virtually unchanged during July 2012 as the index moved from 44 to 45 (still in negative territory).

The employment outlook index remained at 50 - better than last year's July index of 46.

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