Trade activity surges

Johannesburg - The South African Chamber of Commerce and Industry's (Sacci's) Trade Activity Index (TAI), which reflects current trade conditions, surged to 53 in September 2009 from 44 in August 2009.

This is the first time since November 2007 that the TAI was in positive territory ie a reading over 50, but there has been a steady recovery in the index from a low of 32 in April 2009.

"The TAI is likely to maintain this level in the short term as the trade environment comes to terms with more favourable trade conditions," said Sacci.

The sales and new orders sub-components of trade activity also pushed forward in September 2009 relative to subdued performance over the last year and a half. The sub-index on sales volumes increased by 15 points to 60 from 45 in August 2009 and outpaced the steady medium-term upward trend up to August 2009. The new orders sub-index gained ten index points in September 2009 after already increasing by three points in August 2009 to 45. The supplier deliveries index also improved to 49 in September from 42 in August 2009.

"The further increase in the inventory index to 50 in September 2009 following a five-point increase to 45 in August 2009, further reinforces the case for improved trade conditions," said the Sacci analysts.

The selling price index decreased to 50 from 53 in August 2009 while the input price index decreased by four points to 54 in September 2009.

Inflationary pressures therefore appear to be easing again after being neutral in the August 2009 Survey.

In looking six months ahead, respondents continued to be optimistic and accordingly the Trade Expectations Index (TEI) increased further to 59 in September 2009 after recording 55 in August 2009. The TEI has been on the incline since March 2009 and the July, August and September 2009 figures were the highest TEI levels for 2009. The September 2009 TEI of 59 was also the highest recorded since September 2007 when it stood at 61. Sales expectations accelerated further in September 2009 to 70 from 64 in August 2009 thereby confirming improved trade prospects. Expectations for new orders were on 63, up from 58 recorded in August 2009, while the index on prospects for supplier deliveries also increased to 56. All components of trade activity expectations were in positive terrain except for inventories, employment prospects and the backlog on orders received.

In addition to the improved outlook for trade conditions six months hence, inflationary expectations for the next six months (scope of survey) also improved. The indices on expected input and sales prices respectively declined by one and two points.

"The lower inflation expectations is the result of lower crude oil prices, a stronger rand and declining producer prices - despite soaring electricity tariffs," said Sacci. Current employment conditions in the trade environment improved and the employment index rose by three points to 45 in September 2009. Employment prospects also improved to 48 from 44 in August 2009 and from a very low of 39 in February this year.

- I-Net Bridge