Stable power helps keep December trade positive

Johannesburg - Trade conditions remained positive in December 2014, with fewer disruptions due to electricity supply contributing to this, the SA Chamber of Commerce and Industry (Sacci) said on Thursday.

According to its December Trade Conditions survey, the seasonally adjusted Trade Activity Index (TAI) lifted marginally to 56 compared to 54 in November 2014.

Improvements started showing in October last year.

The non-seasonally adjusted TAI is four points above the TAI of December 2013.

"Although trade remains depressed and uneasy about export volumes and low fixed investment spending, import volumes, new vehicle sales and better retail sales volumes compared to earlier in 2014, facilitated positive trade," Sacci said.

"Sacci noted that electricity power constraints have a debilitating consequence for trade conditions.

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However, if seasonal factors were taken into account, sales volumes were slightly lower in December 2014 than in the previous month, but were better than in December 2013.

The new orders sub-index improved by six index points on the December 2013 sub-index.

Supplier deliveries dipped due to lower business activity in December but inventories were nearly unchanged at 60 index points. Backlogs on orders declined.

Prices of both inputs and sales increased with both indices increasing by two index points.

Sacci said tight trade conditions continued to contain price pressures, but the weaker rand and the high import propensity for durable goods would induce further inflationary pressures.

The lower fuel price would counter some cost pressures, but would take time to filter through to sales prices due to leads and lags.

Expectations for both sales and input price increases were higher as the respective indices increased in December.

Losses due to power failures and lower output would put pressure on input costs, Sacci predicted.

The Trade Expectations Index (TEI) is sensitive to, for instance, future electricity supply continuity and thus declined from 61 to 56 in December 2014.

In October 2014 the TEI stood at 65.

Employment conditions in the trade environment improved in December 2014 due to temporary staff being employed in the retail sector.

Six month prospects for employment remained positive as the expectations index increased to 53 in December 2014.

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