Trade conditions have deteriorated further in January, the South African Chamber of Commerce and Industry’s (Sacci’s) Trade Conditions Survey, released on Tuesday, has found.

Sacci’s seasonally adjusted trade activity index (TAI) tapered by one index point to 47, indicating that the pace of trade activity had slowed further.

The seasonally adjusted TAI for January 2014 was below the January 2013 level of 54 index points, as well as the January 2012 level of 50 index points.

“Although tight household financial circumstances contributed substantially to the deterioration, slow domestic economic growth and rising costs place an additional damper on business trade. The recent interest-rate hike is a case in point, impacting both the consumer and business,” Sacci said. 

Meanwhile, sales volumes declined to 44 from 45 in December 2013 while new orders increased from 42 to 47 in January.

“This bodes well for expected improvements in sales in the coming months,” Sacci pointed out.

Inventories also improved slightly following a substantial reduction in inventory levels in December 2013. However, supplier deliveries remained in negative territory at 45 with backlogs comfortably accommodated given the subdued trade conditions.

Further, sales and input price pressures rose sharply in January, with the sales price index escalating by seven index points to 70 and the input price index also climbing by seven points to 78.

Sacci explained that the weaker rand was fuelling inflationary expectations through the higher rand prices of final imported consumption, investment and intermediary goods and services.

Meanwhile, the price expectations indices on sales and inputs remained at high levels of 80 and 85, respectively, in January, after they surged by eight and seven points, respectively, in December 2013. The seasonally adjusted trade expectations index declined to 58 after remaining unchanged and in positive territory at 61 in December 2013.

The six-month outlook for sales volumes also slowed, while new orders were up by two points to 67, while the supplier deliveries index also increased by two points to 56. The inventories outlook shrank to 52, confirming that the path to improvement in trade expectations would occasionally be restrained, the chamber said. 

Current employment conditions in the trade sector dipped further into negative territory to 45 in January, while the employment prospects index was also pressured and contracted by three points to 52 in January.