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Trade activity rallies in June despite weakened trade expectations – Sacci

15th July 2014

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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While overall trade conditions and trade expectations remained weak in June, trade activity showed a modest month-on-month uptick, with the South African Chamber of Commerce and Industry’s (Sacci’s) seasonally adjusted composite trade activity index (TAI) increasing by two index points to 52 after declining by one point to 50 in May.

With the economy performing at “low levels”, domestic and international trade still showed a “reasonable” performance, but with slightly lower sales volumes than last year.

The TAI was a notable five index points lower than in June 2013.

Sacci added on Tuesday that the sales volumes subindex remained on 52 in June while the new orders subindex declined marginally to 48 – confirming weaker, but stable, prospects.

Supplier deliveries appeared to be under slight pressure, as the subindex on deliveries decreased by four points to 54, while inventories remained virtually unchanged month-on-month at 53 – although lower than the 57 of 2013.

Moreover, price pressures remained contained as the selling and input price subindices increased by one and decreased by two index points respectively.

“However, 64% and 70% of the respondents are still experiencing rising prices on sales and inputs, respectively,” Sacci noted.

Real financing costs declined as inflation increased by about one percentage point, while nominal interest rates remained unchanged.

“It appears that local traders are now finding it easier to push through price increases as the higher prices of imported goods and services provide the room to do so,” said the chamber.

Prices for both sales and inputs were expected to increase over the next six months, although by less than that expected in January.

Further, the seasonally adjusted trade expectations index decreased by four points to 55 from 59 in May 2014, while expectations for the sales volume component of trade activity also declined by a substantial margin of five index points to 56 in June 2014.

Current employment conditions remained stable at 48 but were still in negative territory in June.

The prospects for employment in the trade sector improved slightly to 49, following the earlier increase by two index points in May.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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