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Sacci: Trade conditions not improving

Jan 16 2013 12:25 Sapa

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Johannesburg - Trade conditions in December declined by 15 index points to 42 against high expectations of the festive season retail, the SA Chamber of Commerce and Industry said on Wednesday. 

The decline was contrary to a five points improvement in November 2012. 

Seasonally adjusted trade activity index (TAI) decreased to 44 in December from 53 in November. 

However, it was three points higher than in December 2011. 

Richard Downing, economist at Sacci, said the anticipated improvement in the TAI on the back of probable stronger retail activity over the Christmas season did not materialise.

"All the sub-components of trade activity performed negatively between November and December 2012. 

He said the substantial decline in sales and new orders in December 2012 set trade activity levels back by about six months.

All corresponding trade processes like supplier deliveries and inventories declined.

"The greater than inflation increases in labour costs, higher utility tariffs and the volatility of the rand affected input prices and threatened trade margins..." said Downing.

The six-month forward trade expectations index (TEI) recovered the lost ground of November 2012 and increased from 51 to 60 in December 2012.

This was higher than the 59 of a year ago.

Downing said the increasing uncertainty in the South African and global economy in the second half of 2012, industrial action and growing domestic input price pressures had lowered the outlook for trade conditions in the first few months of 2013.

Employment in the trade environment slipped in December and moved into negative territory despite temporary seasonal employment opportunities in retail trade.

The employment index declined by two points to 49.

Employment prospects for the next six months may improve as the employment outlook index increased from 47 to 53 in December 2012, said Downing.  

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