The South African Chamber of Commerce and Industry’s (Sacci’s) seasonally adjusted composite Trade Activity Index (TAI) remained below the critical 50-point mark, dropping to 47 in August.

The TAI had remained in negative territory since May.

However, the nonseasonally adjusted TAI slightly improved to 46 from 45 in July and was three index points above the bleak TAI of 43 in August 2014.

Sacci explained that the index remained subdued owing to tight conditions as credit extension to households decreased by 2% in real terms, reflecting highly indebted households’ inability to obtain credit.

The unfavourable global economic developments also inhibited the trade climate, it noted, adding that trade expectations for the next six months also declined.

However, they remained positive with the seasonally adjusted Trade Expectation Index (TEI) at 56 in August, compared with 61 in July. 

The sales volumes subindex declined from 49 in July to 48 in August, but new orders improved somewhat to 44 in August from 37 in July.

The possibility of even higher interest rates contributed to uncertainty and constraints to trade, particularly in retail trade and with the number of highly indebted households.

Supplier deliveries also remained less optimal, as the subindex persisted at 41 in August, whereas the inventories subindex improved from 49 in July to 51 in August. 

Tight trade conditions continue to put pressure on sales prices with the subindex remaining at 51. The input prices subindex increased by one point to 68 in August. 

Meanwhile, price expectations on inputs rose by two index points to 76, while the sales price expectations subindex was down to 60 from 67 in July.

Sales expectations and expectations for new orders turned negative and dropped by three and four points respectively in August.

However, the employment situation in the trade sector remained in positive territory with the current employment subindex marginally down by one index point to 50, while the subindex on employment prospects remained at 53 in August.