Current drought conditions, rising prices and the uncertain political situation in South Africa have contributed to shrinking trade margins and other seasonal factors impeding local business, causing trade conditions in March to remain in negative territory for the fifth consecutive month, according to the South African Chamber of Commerce and Industry (Sacci).

The March edition of Sacci’s Trade Conditions Survey, published on Thursday, revealed that the seasonally adjusted composite Trade Activity Index (TAI) for the month stood at 45 – an improvement on February’s TAI of 41, but lower than the 47 recorded in March 2015.

The nonseasonally adjusted TAI increased from 44 to 48, with the sales volumes subindex remaining at 51 in the period, while the new orders index increased from 42 to 49.

Supplier deliveries increased, with the subindex improving to 44 from 37 in February. Inventories, however, declined somewhat.

Sacci recorded a notable increase in price subindices, with the sales price subindex increasing by 9 points to 68, after only a one point increase in February 2016. The March 2016 input cost subindex also rose by 9 points to a high of 84. 

The input cost and the sales price indices were respectively 6 and 14 points higher than in March 2015.

Although sales price inflationary expectations eased somewhat by 2 index points to 73 index points, the input cost expectations index rose by 2 points to 81 in March.   

Meanwhile, the possibility of further interest rate increases, uncertainty about the volatile rand exchange rate and the sluggish domestic and world economy were weighing on trade volumes.

Trade expectations remained negative and implied that tight conditions would continue over the next six months. The seasonally adjusted Trade Expectations Index (TEI) stood at 45 in March, after measuring 44 in February.

Sales, new orders and supplier deliveries improved, though they remained in negative territory. Expected stock holdings declined slightly.

While the employment situation in the trade sector improved notably in March to 48, the prospects for employment in the sector declined, owing to a drop in the subindex from 47 in February to 40 in March.