While trade conditions have remained in positive territory for the first five months of the year, the South African Chamber of Commerce and Industry (Sacci) on Thursday cautioned that trade conditions could be further hampered by tighter retail conditions and increased pressure on imports. 

This came as the economy was unable to sustain a strong improvement in April trade conditions, which surged by five points from March, and, as a result, Sacci’s Trade Activity Index (TAI) declined by five points from April to measure 56 in May.

The organisation said that, while the trade sector appeared to be performing better than the broader economy, the May contraction confirmed the volatility in trade conditions under the present economic uncertainties. 

Further, the seasonally adjusted TAI dipped by eight points to 57, after improving by 11 index points in April and, with economic growth declining to below 2% year-on-year, Sacci cautioned that trade conditions were likely to come under strain for the rest of the year.    

Sales volumes and new orders also reversed their respective gains of ten and eight index points in April. 

Supplier deliveries and backlogs on orders, however, slowed slightly in May, with inventory levels increasing owing to slowing sales volumes. 

This came as the pressure on sales prices remained high, but stable, with the index at 62 for both April and May. This was three points above May 2012’s measurement of 59. 

In addition, at 71, the input prices index exceeded the sales prices index by nine points in May, indicating relatively high input cost pressures. 

Meanwhile, trade prospects for the coming six months remained positive, with the Trade Expectations Index (TEI) at 61 in May compared to 64 in April, while the seasonally adjusted TEI averaged 62 for the first five months up to May. 

“The prospects for sales volumes and new orders slowed somewhat from the beginning of the year but, at levels above 60, it should not yet be regarded as altering the current trend,” Sacci stated.

The outlook for input and sales prices eased as the indices decreased in May by four and five index points respectively – albeit from high levels of 73 and 83, respectively, in April.

Moreover, employment conditions in the trade environment weakened in May, with the index declining by three points to 49.