The South African Chamber of Commerce and Industry’s (Sacci’s) Trade Activity Index (TAI) improved to 49 in August after having contracted into negative terrain in June and July.

The seasonally adjusted TAI measured 52 in August, up from 47 in July and 49 in August 2015.

Respondents cited political instability, low economic prospects, volatility of the currency, seasonal factors, and regulatory compliance costs as impacting trade conditions. The successful completion of the local government elections and a return to normal business activity after the hectic election process were positive experiences.

Lower profit margins and an unsatisfactory return on investment are consequences of the tight trade environment.

The new orders subindex picked up five points to 49 in August after the decline of five points in July.
Sales volumes also improved with the subindex up to 50 from 46. Inventories recovered from 45 index points to 49.

The backlog on orders increased slightly by three index points to 37 reflecting ongoing listless trade conditions.

Price pressures stabilised as the subindex on sales prices increased by one point to 55 in August.

Input prices, however, rose with the index increasing from 56 to 61 in August.

Price expectations accelerated substantially as the sales price index jumped by 12 points to 72 and expectations on input prices also sped up as the index rose to 76 from 64 in July.

Tighter credit availability, stable interest rates, the weaker and more volatile rand and higher inflationary expectations sent mixed signals to the trade environment. 

Trade expectations remained in a positive area and improved as both the seasonally adjusted and nonseasonally adjusted Trade Expectations Index increased to 59 and 60 respectively, from 52 and 53 respectively in July.

Expectations on sales volumes and new orders notably improved in August, by nine points to 67, and 12 points to 65, respectively. Inventory levels remained stationary, but expected supply delivery improved.

The latest better-than-expected data for output in the second quarter could justify the improved expectations if further momentum could be gained, said Sacci. 

The decline in the employment subindex to 47 in July was turned around to 54 in August, while the prospects for employment over the next six months also improved to 50 in August after the subindex declined to 47 in July.