Trade activity for July in negative territory

Bloemfontein - The Trade Activity Index declined by four index points in July 2014, the SA Chamber of Commerce and Industry said on Thursday.

"The Trade Activity Index (TAI) declined by four index points to 48 in July 2014 from 52 in June 2014," the chamber said in a statement.

This followed after the trade conditions index remained stable and had been close to the 50 mark since February 2014.

The chamber said July was the first month in 2014 in which trade conditions dipped well below 50.

The pressure on the trade sector was broad-based and all trade activity sub-indices were in negative territory in July due to uncertain economic prospects.

The July TAI was 10 index points below the July 2013 TAI.

The chamber said the sales volumes sub-index was eight points lower than in July 2013, while the new orders sub-index was 15 points lower than in July 2013, and indicative of a challenging period ahead.

Supplier deliveries, which had been above 50 points for the past five months, also decreased to 39 in July.

The inventories index also declined by five index points to 48.

The softer trade conditions further took some pressure off prices as the selling price sub-index decreased by six index points to 58, while the input price index remained on 70, much higher than the selling price index.

The chamber said the divergence in prices would further squeeze profit margins.

Real financing costs further increased as interest rates rose by 0.25 percentage points which had placed more pressure on debt burdened consumers. It also increased financing costs for businesses.

In contrast to the TAI, the seasonally adjusted trade expectations index (TEI) increased by five points to 60 from 55 in June 2014.

Sacci said expectations for the sales volume component of trade activity also forged ahead by five index points to 61 in July 2014.

The chamber said the employment conditions index in the trade environment contracted to 46 in July from 48 in June 2014.

The prospects for employment in the trade sector, however, improved to 51 following the earlier increase by one index point in June.