The South African Chamber of Commerce and Industry (Sacci) notes that trade conditions were badly affected in April as a result of the lockdown measures implemented to halt the spread of Covid-19.
It notes that this called for extraordinary efforts by businesses to keep afloat.
Sacci's seasonally adjusted Trade Activity Index (TAI) declined by 11 points month-on-month to 26 in April, while the seasonally adjusted Trade Expectations Index (TEI) dropped by ten index points to 31, which Sacci noted was well beyond recessionary conditions.
Year-on-year, the TAI declined by 12 index points, while the six-month TEI decreased by ten points.
Sales volumes and new orders plunged as 78% and 76% of the respondents respectively experienced adverse conditions in these important trade elements. The adverse effect on new-vehicle sales in April (a 98% month-on-month decline) is an example of the notable impact the lockdown had on ‘non-essential’ trade, says Sacci.
Supplier deliveries, which decreased by 12 points, and inventories, which decreased by nine points, pointed towards the effect on stock and supplies breakdown, it points out.
Trade expectations for the next six months also plummeted by ten index points as expectations for sales and new orders both contacted substantially.
Supplier deliveries and inventories are also expected to deteriorate notably over the next six months. Both sales and input prices are expected to be under pressure but to remain above the 50-point mark.
“Due to the lockdown, certain businesses and food processors have been closing owing to fixed overheads but with a rapid dwindling income. Respondents call for an end to the lockdown as they cannot afford to continue. Respondents accept a calculated but balanced risk to unlock the economy,” said Sacci.
Although employment held up reasonably in March, employment decreased notably in April with this subindex having declined by nine index points to 32, while employment opportunities for the next six months remains bleak, as the subindex declined by eight points to 33.