The South African Chamber of Commerce and Industry’s (Sacci’s) Trade Activity Index (TAI) pulled back into negative territory, at 48 points, in February, following a surprising rise to 59 points in January.

The TAI had improved to 57 and 58 points respectively in October and November last year, but retreated to 48 in December.

Although fewer trading days in February had had an impact, the adjusted TAI was six points lower than in February 2014, Sacci pointed out on Wednesday.

The trade conditions index was in line with the expected slow economic growth for this year.

Sacci reiterated that excess domestic demand would probably find its way towards imports, which would result in a larger deficit on the account of the balance of payments, adding that import volumes had trended higher since the last quarter of 2014.

Meanwhile, electricity constraints were having a significant impact on trade, especially for small and medium-sized businesses.

February also saw sales volumes being markedly lower at 51 – four points lower than in February last year – with fewer trading days having contributed to the decline.

The new orders subindex decreased by five index points year-on-year in February and  supplier deliveries contracted by six index points, while the 11-point lower backlog index reflected slack trade conditions.

Sales and input prices appeared to discount lower fuel prices, at three and one index points respectively.

Businesses were also struggling to keep up with high cost pressures in 2014 with the continuing weaker rand, costs owing to unpredictable power supply, real labour costs and the prices of imports hindering profitability.

The expected sales price index decreased by seven index points to 67 and the expected input price index decreased by four index points to 73.

Sacci pointed out that the Trade Expectations Index (TEI) was sensitive to the inconsistency in policy pronouncements, signs of meddling with property rights, possible unexpected situations like power outages, the volatility of the rand and labour disruptions.

The seasonally adjusted TEI was only three index points above the TAI in February. The margin between expectations and the current situation “narrowed noticeably and even switched as expectations dwindled”.

Employment conditions in the trade environment dropped by five index points to 52 in February, while the six-month prospects for employment decreased by eight index points to 50.