The Trade Activity Index (TAI), compiled by the South African Chamber of Commerce and Industry (Sacci) recovered to 40 points in May, up from 32 points in April.

The fewer working days in April had had a “profound” effect on trade conditions in that month, stated Sacci, noting that the TAI had reached its lowest level since the survey started in August 2000.

However, trade conditions more than recovered their pre-April level last month, although remaining low. Sales volumes were, nevertheless, also making promising gains towards positive territory.

All the demand subcomponents of trade activity, except for inventories, had improved on their April 2009 levels, reported Sacci.

The subindex on current sales volumes gained 15 points month-on-month, while the new orders subindex gained nine points, and the backlog subindex gained seven points. 

Supplier deliveries, which dropped to 29 points in April also recovered markedly by nine points to 38 points in May.

Sacci noted that the easing price pressures of the past few months had paused in May, as the selling price index increased by one point to 49 and the input price index rose by one index point to 56.

Inflationary pressures had been contained, as the prices of imported producer goods declined by nearly 15% in April 2009 and the prices of locally produced goods rose by only about 3% in April, said Sacci.

The input price index was still considerably lower than its high of 84 points in June 2008, the chamber added.

Meanwhile, respondents to the survey had remained relatively optimistic about the six months going forward, although the trade expectations index (TEI) was slightly down to 46 points in May, compared with 48 points in April.

Global trade and global economic conditions were also showing signs of revival, noted Sacci.

The TEI sales subindex declined by four points to 50 points in May, with the expected new orders subindex declining by three points to 47 points and the expected supplier deliveries subindex declining by two points to 43 points.

Although these subelements of trade have been declining between April and May, they were still above the February and March levels, commented the chamber.

Further, inflationary expectations had also increased in May, with the indices on expected input and sales prices each having increased by four points.

This implied that inflation was expected to start rising again towards the end of the year. The stronger rand could assist in containing the prices of imported goods and services, notably fuel, said Sacci.

Meanwhile, current employment conditions in the trade environment had remained almost unchanged at 40 points, while the employment prospects subindex had improved slightly by two points to 43 points.