SA trade conditions idle in neutral

Johannesburg - Trade conditions started on a neutral note in January, as reflected in the Trade Activity Index (TAI) released by the SA Chamber of Commerce and Industry (Sacci) on Monday.

"After the trade environment suffered a setback in December 2011 compared to October and November 2011, the non-seasonally adjusted TAI recovered to 48 in January 2012," Sacci said.

When adjusted for seasonal factors, the TAI was 50 in January 2012, compared to 49 in January last year.

The TAI is a composite index of sales volumes, new orders, supplier deliveries, inventory levels and employment. A reading of 50 reflects no change and above 50 indicates a positive level. Below 50 is negative.

"All the components of trade activity improved on the December 2011 numbers, but for the employment index that declined by two points to 44," Sacci said.

The sales volume index recovered, but was still 13 points below the recent high in November 2011. Inventories increased by 13 index points as re-stocking following the holiday season took place, while supplier deliveries returned to pre-holiday season levels.

The Trade Expectations Index (TEI) - which looks at conditions expected in six months time - continued to improve in January at 62. This was after registering a strong 59 in December 2011.

However, it was slightly lower than last January's TEI of 64.

"The January 2012 six month outlook for all components of trade is better than the average for these components for the latter half of 2011," Sacci said. It warned conditions would be tough this year.

"With the high costs of domestic inputs and a possible stronger rand, local businesses will face tough conditions in 2012 in a slow growing economy."

Sacci said interest rates were likely to remain unchanged in 2012, which would ease the cost of financing.

"Both the current employment conditions as well as the six-month outlook for employment in the trade environment have moderated," it said.