Business trading conditions remain weak – index

13th June 2018 By: Marleny Arnoldi - Creamer Media Online Writer

Trade conditions for businesses remained weak in May, says the South African Chamber of Commerce and Industry (Sacci).

The Trade Activity Index (TAI), indicating prevailing trade conditions, was at 40 points in May, compared with 39 points in April. “This is well into negative territory and still below the 50-index point benchmark of no change,” said Sacci.

The survey also shows trade expectations for the next six months, with the Trade Expectations Index (TEI) having declined from 54 in April, to 51 in May.

The current weak trade conditions are marked by lower sales volumes, fewer new orders and declining supplier deliveries.

The May trade conditions were more restrained than in May 2017, with the TAI nine index points lower. Trade expectations, however, are better than a year ago at three index points above the May 2017 level of 48.

Some respondents raised concerns about potentially impeding effects on trade –uncertainty regarding the Mining Charter; declining export orders; a stronger rand affecting rand earnings from exports; new contract prices under pressure; higher fuel costs; and service protests’ impacts on trade and trading hours.

According to the survey, sales volumes remained under pressure in May, with the sub-index only one index point higher month-on-month, at 36. New orders were marginally better with the sub-index up one point to 35.

Expected sales volumes and expected new orders were both lower with the sales expectations subindex declining to 57, from 61 in April.

The new orders index slipped from last month’s 54 to 52. Subdued trade activity led to less inventory holdings with the subindex declining from 50 to 45 in May.

The sales price index eased further by three index points to 58, while the input price index decreased by seven index points to 65. Tight trade conditions have put additional stress on prices bringing the viability of many businesses into focus.

Price expectations suggest lower sales prices, even with input prices increasing – suggesting a further squeeze on profits and more challenges to remain in business.

The employment subindex improved by one point to 44 in May, while the six-month employment outlook index declined by seven index points to 45.

This means there are likely to be fewer prospects for employment creation in the trade environment, states Sacci.