May trade conditions presenting a challenging environment – Sacci

23rd June 2022 By: Schalk Burger - Creamer Media Senior Contributing Editor

The South African Chamber of Commerce and Industry’s (Sacci’s) May Trade Conditions Survey found that expectations for trade activity six months hence were mirroring the uncertainty in the global market, and the expectations index subsided into negative territory, having lost 12 index points between April and May.

"Only 48% of the respondents in May expected trade conditions to improve six months from now, compared with 59% in April. Declining sales volumes and fewer new orders are the main reason for the negative outlook," the chamber reported on June 23.

Inflationary pressures were mainly cost-push driven, as more than 80% of the respondents expect input costs to rise. Sales prices are expected to increase at a slower pace mainly owing to slowing economic conditions and uncertain demand.

Additionally, rising fuel prices and the inherent cost-push associated with higher financing costs have impacted on the trade environment. Load-shedding, crime and logistical constraints, meanwhile, were among the most pressing external factors listed by respondents.

"Present sanguine trade conditions caused employment opportunities in the trade sector to remain tight. Only 38% of respondents indicated increasing their staff component at present, while expectations on job opportunities were unchanged for the next six months," Sacci said.

Further, data on the real value added by the wholesale and retail trade, hotels and restaurants indicate that activity bounced back by 6% in 2021, after having decreased markedly by 12.4% in 2020.

However, the 6% year-on-year increase in real value added by this sector in the first quarter of this year is still below the pre-Covid-19 level of the first quarter of 2020, Sacci said.