Trade prospects have deteriorated further in July, from the already negative outlook in June, the South African Chamber of Commerce and Industry (Sacci) reported on Wednesday, following the release of its latest Trade Conditions Survey.
Trade expectations for the next six months, as reflected by the Trade Expectations Index (TEI), declined from 49 in June to 45 in July.
The Trade Activity Index (TAI), which measures prevailing trade conditions, meanwhile, improved slightly, but stayed in negative territory at 41, compared with 37 in June.
The TAI had measured 47 in July 2017.
Trade conditions, which were weak in June, when 71% of respondents experienced depressed sales volumes, improved in July, when 58% respondents experienced declining sales volumes.
External factors that made respondents to the July survey uneasy were work stoppages, the quality of job applicants and violent and disruptive labour action. Consumer purchases were also badly impacted on by the lack of confidence in the market.
Fuel costs and the increase in value-added tax are still impacting trade conditions negatively.
Notably, there is a knock-on trade effect by the slowdown in the construction sector, said Sacci.
According to the survey, sales volumes improved after the severe pressure experienced in June. The sales volume subindex, at 42 in July, was 13 index points higher than the 29 recorded in June – this was also better than the 36-point mark of May.
New orders improved, with the subindex up by three points to 35. The expected sales volumes index moved into negative territory, from 53 in June to 49 in July.
The index on expected new orders was lower, at 44, compared with 50 in June. Subdued trade activity and decreased sales volumes are putting additional pressure on inventory holdings and profitability.
The subdued trade conditions are exerting pressure on sales prices, with 55% of respondents indicating rising sales prices in July, compared with 61% in April. The input price index rose by another three index points to 71 – implying rising costs. Price expectations point to rigid higher prices, with 75% of respondents expecting higher input costs.
The employment subindex moved further into negative terrain at 39, compared with 45 in June. The six-month employment outlook index declined by one index point to 42 – implying tight employment conditions.