Second Covid-19 wave and stricter lockdown impact on trade conditions

17th February 2021 By: Donna Slater - Creamer Media Contributing Editor and Photographer

The second wave of Covid-19 infections and the return to a more stringent lockdown in December 2020 caused a setback in trade conditions during the holiday period, which spilled over into January, the South African Chamber of Commerce and Industry’s (Sacci's) Trade Activity Index (TAI) shows.

The TAI declined to 39 in December 2020 and further to 34 in January, from 47 in November 2020.

The deterioration of trade conditions was evident in almost all facets of trade, except for supplier deliveries.

Sales and new orders declined the most, while inventories and employment declined relatively less, the TAI shows.

Sixty-six per cent of the respondents to the TAI experienced worse trade conditions in January this year than in January 2020.

However, trade expectations held up better, but also reflected the pressure after the temporary improvements in September and October 2020.

Overall, the Trade Expectations Index (TEI) reveals that trade expectations, which declined to 43 in November 2020, continued to experience pressure in December by staying at 43, and then slipped further to 38 in January.

Further, the six-month expectations on components, such as sales and orders, did not weaken as much as for recent trade conditions. However, expectations of lower supplies and declining inventories were more evident in the January 2021 survey.

Taking these considerations into account, Sacci reveals that the deteriorating trade conditions did not have a notable effect on prices, with present and expected sales prices not changing materially from December 2020 to January. As such, sales prices remain under downward pressure while input prices trend upwards.

Meanwhile, respondents to the surveys also listed external matters, apart from the health aspects of the Covid-19 pandemic that impacted trade conditions. These include slow business momentum, uncertainties about the timing and duration of lockdowns, collapsing infrastructure, a lack of maintenance and poor service delivery at local government level.

Sacci says these are of major concern and are adversely affecting business.

In terms of employment conditions in trade, the chamber reports that these weakened slightly in December 2020 and January, with 38% of respondents being positive about employment in January compared with 43% in November 2020.

Sacci says respondents expect to increase jobs over the next six months – 40% were positive on employment in January against 38% in November 2020.

The chamber notes that some improved bookings by accommodation venues during January and hope on government’s 2021 Budget are some positive notions put forward.