Trade Activity Restrained but Steady
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Trade activity remained in positive territory in March 2014 but was still restrained as the Trade Activity Index measured 54 – the same as in February 2014. In March 2013 the TAI recorded 56.
The seasonally adjusted TAI declined slightly by 1 index point to 50 in March 2014 and was down from 52 in March 2013. The marginally improved business climate in March 2014 (according to the SACCI Business Confidence Index) helped to keep trade conditions in positive territory despite tighter overall financial conditions and the financial stresses experienced by the consumer. Loans and advances by monetary institutions to private businesses increased by 12.7% in February 2014 and assisted businesses in coping with mounting cost pressures.
The sales volumes index increased from 55 in February 2014 to 59 in March 2014 while the new orders index remained at 57. Consistency of new orders confirms the relatively positive outlook for trade activity in the next few months. With the inventory index at 48 in March 2014, stock levels remained almost unchanged. Supplies appear well provided and do not pose a risk over the next six months (scope of survey).
The sales and input price indices remained high in March 2014 at 67 and 80 respectively, suggesting continuing inflationary pressures in the trade environment. The rand exchange rate continued to improve in March 2014 and alleviated some immediate input cost constraints. Higher costs, as a consequence of the depreciation of the rand, will remain in the supply chain over the medium term. Price expectations (sales and input) therefore remained high with the expectations indices at 73 and 81 in March 2014.
The seasonally adjusted trade expectations index remained at 58 in March 2014 for the third consecutive month. Expectations for the components of trade activity were well into positive territory and did not alter the cautious but positive outlook. Current employment conditions deteriorated slightly into negative territory in March 2014 as the employment sub-index declined from 50 to 49. The prospects for employment in the trade sector improved slightly as the sub-index increased from 52 in February to 54 in March 2014.
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