Photo by: Duane Daws
The seasonally adjusted South African Chamber of Commerce and Industry (Sacci) Trade Activity Index moved into positive territory, at 51, in June, compared with 50 in May.
This was also five points higher than the 46 measured in June 2015.
Sacci noted that respondents to its trade conditions survey had cited the lack of government support, political posturing for local government elections, service protests, seasonal factors and a slow pace of orders materialising, as restraints to trade in June.
The new orders subindex slowed slightly from 50 in May to 49 in June, while the sales volumes subindex slipped from 59 to 51. The inventories index increased by two points to 49 in June but supply deliveries dropped from 50 to 47. The low backlog on orders remained unchanged at 38.
“Prices eased up notably as the subindices of both sales prices and input price indices declined further in June,” stated Sacci.
The sales price index declined by six points to 59, while the input price index declined by 11 points to 69 from 80 in May. Price expectations also slowed with the sales price index declining by one point to 68 and expectations on input prices remained unchanged on 78.
“Stable interest rates and the stronger and less volatile rand (given the pressure on the British pound owing to Brexit) led to easing price expectations. However, rising energy (electricity), and wage and salary costs are expected to weigh on profit margins in a tight trading environment,” the chamber noted.
Meanwhile, trade expectations moved further into positive terrain in June, with the seasonally adjusted Trade Expectations Index improving to 56 from 55 in May.
“Trade components like sales volumes and new orders were more positive, but inventory and supply expectations declined. The International Monetary Fund’s latest predictions for lower economic growth for 2016 and 2017 for South Africa could be an indicator of dampening trade prospects,” said Sacci.
The employment situation in the trade sector deteriorated marginally as the index declined by another point to 48 in June; however, the prospects for employment for the next six months in the sector improved with the subindex rising to 48 from 45 in May.