Tighter household budgets affect trade activity – Sacci
Trade conditions remained in negative territory in July, with the seasonally adjusted composite Trade Activity Index (TAI) measuring 47, the South African Chamber of Commerce and Industry (Sacci) said on Wednesday.
Although marginally up from 46 in June, tighter household budgets and the subdued domestic and global economic environment kept the lid on all facets of trade, it stated.
The nonseasonally adjusted TAI remained at 45 in July – the same as in July 2014. Notwithstanding the trade conditions, which remained negative and unchanged in July, trade expectations for the next six months were slightly better and in positive territory, with the Trade Expectation Index (TEI) increasing to 59 from 58 in June.
The sales volumes subindex was 49 in July. New orders continued to decline, with the subindex at 37, down from 40 in June. Higher interest rates, announced in July, would also contribute to the constraints to trade, particularly highly indebted households and retail trade.
Continuing problems with electricity supply shortages affected the trade of consumer, intermediary goods and services and foreign trade competitiveness. The supplier deliveries subindex contracted, from 46 to 41, while the inventories subindex improved to 49 from 47.
Meanwhile, Sacci noted that tight trade conditions pressured sales prices with the subindex down by five points to 51. However, input prices increased by seven index points to 67 in July. The scissor effect of lower sales and higher input costs was having a negative effect on businesses with a lower return on investment.
Price expectations, particularly on inputs, rose by four index points to 74 with sales prices remaining unchanged at 67.
Notwithstanding the subdued TAI, the seasonally adjusted TEI was positive and improved from 58 to 61. Sales expectations and new orders remained nearly unchanged at 67 and 60 respectively in July.
Employment unexpectedly moved into positive territory as both the prospects and current employment subindices improved to 51 and 53 in July, after both being negative since March.
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