Trade activity shrinks

Johannesburg - The seasonally adjusted Trade Activity Index (TAI) shrank by four index points to 43 points in August, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday.

This was the second consecutive month the TAI had contracted, as it shrank four index points in July, the chamber said in a statement.

The TAI for August 2014 was nine points below its seasonally adjusted level of August 2013.

"This is a significant departure from the average level of 50 that prevailed since February 2014.

"On an unadjusted basis, the TAI declined by two points from July to August, but was also at a concerning level of 43," Sacci said.

Domestic trade activity continued to decline, with economic year-on-year growth of less than 1% in the second quarter of 2014.

"The sales volumes sub-index also disappointed and, after being six points down in July 2014, it declined by a further six points to 40 in August."

The new orders sub-index dropped by five points in August, while supplier deliveries recovered to 45 after dropping to 39 in June 2014.

The inventories sub-index increased to 53 in August, from 48 the previous month, in anticipation of positive trade expectations.

The selling price sub-index decreased by eight points to 50, while the input price index dropped seven points to 63, which was significantly lower than the average 79 points average in the first quarter of 2014.

"Despite the current subdued trade conditions, 60% of respondents in the August survey remained positive about trade conditions for the next six months," Sacci said.

"Expectations for both sales and input prices moderated further in August in line with declining price pressures currently."

Sub-optimal trade conditions and declining prices showed that the trade environment is facing difficult times that could have negative long term structural consequences for trade and competitiveness.

However, the survey respondents remained upbeat about sales volumes, new orders, supplies and inventories in the coming half-year.

The employment conditions index in the trade environment shrank to 45 in August from 46 the previous month.

"The prospects for employment in the trade sector remained positive and the index increased by one point to 52 in August. However, the latter index is far from strong enough to indicate significant job creation."