'Seasonal' drop in December trade

Johannesburg - The SA Chamber of Commerce and Industry's (Sacci's) trade activity index (Tai) has dropped to negative territory in December, but the organisation described the movement as "seasonal".

For December 2009 the Tai - which reflects current trade conditions - declined to 42 from November's 51, Sacci said in a statement on Thursday.

"This is the first time since September 2009 that the Tai has been in negative territory, i.e. below 50," Sacci said.

However, it added that the Tai's decline between November and December was a "normal seasonal phenomenon as non-retail trade reaches its annual peak in November".

Sacci said the relative decline in the Tai in December 2009 had been greater than in 2008 but less than in 2007.

"The steady recovery in the Tai from a low of 32 in April 2009 may nonetheless be sustained into 2010 given the high trade expectations for the next six months," Sacci said.

It said that the sub-index on sales volumes dipped by 14 index points to 45 in December 2009 while the new orders index dipped by 11 points to 39 in the same month.

"The supplier deliveries index declined to 26 in December 2009 from 31 in November 2009.

"These occurrences are also due to the seasonal (December/January) slowdown in overall trade activity."

Sacci said the decrease in the inventory index to 39 in December 2009 confirmed low business-to-business trade activity in December.

The index on selling prices remained on 49 for the third consecutive month following the 50 of September 2009.

The input price index decreased marginally by one point to 52 in December 2009, Sacci said, adding that inflationary pressures appeared to have been contained for the moment.

In looking six months ahead, respondents remained highly optimistic as the trade expectations index (Tei) improved by a further five points to 68 in December 2009, Sacci said.

"While the October 2009 Tei was a correction of an overly optimistic outlook in September 2009, the November and December 2009 surge in the Tei supports a more optimistic outlook as the 2010 World Cup Soccer event draws closer."

Sales expectations had gained six points in December 2009 after a 10 point surge from October 2009 to November 2009.

Expectations for new orders registered 71 - up from 67 in November 2009 - "indicating a strong recovery from the cautious October 2009 outlook."

The index on six month prospects for supplier deliveries also improved, Sacci said.

In contrast to the positive outlook for future trade conditions, the expectations for higher inflation for the next six months did not change in December 2009 after rising markedly in November 2009.

The indices on expected input prices rose slightly by two index points to 70 after increasing to 68 in November 2009.

- Sapa