Industry organisation the South African Chamber of Commerce and Industry (Sacci) says its August Trade Conditions Survey showed that the number of businesses that experienced improved trade conditions increased from 35% to 48% over the past six months, even though 56% of the respondents experienced better trade conditions in August 2022 than a year ago.

"The power constraints and fuel price hikes would inevitably impact on this picture to the negative. Output growth in the trade, catering and accommodation sector slowed to 0.7% year-on-year in the first quarter of 2022 compared to 6% year-on-year growth in the first quarter of 2022," the chamber notes.

Further, although 59% of the respondents had optimistic expectations in April, expectations in August for the next six months declined to 56% of positive respondents.

"All components of trade activity, including sales, new orders and the backlog on orders, improved over the six months prior to August. It is notable that 49% of respondents are employing more staff than the 28% in March. In general, trade conditions had stabilised over July and August, but the slowing down is already evident," Sacci highlights.

Inflationary pressures, which have been intensifying over the first seven months of this year, appeared to be plateauing in August. Seventy per cent of respondents saw sales prices increasing in August, while 67% anticipate sales prices rising over the next six months.

Further, operating costs also slowed as 88% of respondents, compared to 91% in July, experienced rising input prices or tariffs, while 82% of respondents still continue to believe input prices will continue to rise over the next six months. Although fuel prices declined slightly in August, the price of diesel as a basic input for instance was still 57% higher than in August 2021.

"The multiplying effect of fuel and basic inputs led to consumer inflation reaching 7.8% in July 2022 and producer inflation at 18%. With higher interest rates and real household spending under pressure, the inherent cost push dynamics will continue to restrain the trade environment," Sacci notes.

In addition, load-shedding, the consistently high crime rate and logistical constraints are among the most pressing external factors listed by respondents to stifle trade. Hospitality, and notably accommodation and events venues, are starting to show some signs of recovery which is very encouraging with the last quarter of the year normally serving as a peak period.

Respondents complain that government is not assisting and does not respond to calls to engage with small, medium-sized and microenterprises as one of the biggest sectors that can improve the ailing economy and create jobs. Respondents also noted that consumers are very price sensitive and are scaling down to more affordable products and services, Sacci says.

Further, trade conditions, which remained subdued with the Trade Activity Index below 50, although fragile, still saw an increase in employment, with 49% of respondents increasing their staff in August. In July, 43% of the respondents expected to hire more staff over the next six months, while about 45% in August intended to increase staff over the next six months, the chamber adds.