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Trade remains constrained, but employment numbers expected to rise

13th December 2017

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

     

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The South African Chamber of Commerce and Industry’s (Sacci’s) latest Trade Activity Index (TAI) remained in negative territory during November, declining by one index point to 45.

This, the chamber noted, was as a result of important elements of trade contracting during the month, except for new orders, which increased, and thus supported expectations, which improved to 59 points, well above the borderline level of 50 where the Trade Expectations Index (TEI) has persisted since March.

The seasonally adjusted TAI was down by two index points in November, emulating the sluggish economy, while the seasonally adjusted TAI was seven index points lower in November than a year ago.

The tougher trade conditions since September suggest a further decline in the value added by the trade sector, as well as lower import volumes. The value-add of the trade sector declined by 1% year-on-year in the first three quarters of this year.

New-vehicle sales and export trade volumes performed better than general trade conditions indicate.

Meanwhile, the seasonally adjusted TEI improved by eight points in November. The significant volatility of the rand against currencies of major trading partners, higher real interest rates and high unemployment have fed negative trade prospects. It is expected that nominal interest rates will remain unchanged and thus leave the real cost of finance relatively high.

Sales volumes decreased in November with the sales volume index down from 56 to 49. The new orders index, however, improved to 45 from 41 in October with expected sales volumes and expected new orders improving substantially into positive territory at 63 and 58 respectively in November. The inventory index increased slightly.

The sales price index dipped noticeably by ten points to 50 and the input price index by six points to 66.

The decline in especially sales prices reflects the tough trade conditions and a ‘buyers’ market’. Being relatively high, the price indices contain less demand inflationary pressures. Price expectations, however, remain high with both the sales and input price indices increasing by three index points.

Meanwhile, Sacci noted that 81% of the respondents experienced higher input costs, with the rising crude oil price, higher electricity tariffs and a volatile and weaker rand fuelling inflationary expectations. 

The employment subindex remained flat at 43 in November, while the employment outlook index for the next six months unexpectedly lifted by eight points in November from 41 in October.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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