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Trade conditions defy weak economy

Nov 14 2012 12:42 Sapa

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Johannesburg - South Africa's trade conditions have escaped a poor economic situation plagued by strikes and downgrades, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday.

Sacci said the seasonally adjusted trade activity index (TAI) - which indicates how businesses feel about current trading conditions - increased to 50 points in October, after dropping four point in the previous month.

An index level below 50 represents negative territory, while one above 50 is positive.

The non-seasonally adjusted TAI moved into positive territory for the first time since May 2012. The TAI was two points above the index for October 2011.

"After trade conditions appeared to be moulded in negative territory, all the sub-components of trade activity, apart from employment, turned positive," Sacci said in a statement.

"The negative business sentiment associated with the labour disruptions in September 2012 caused a shift in the pre-festive season business trade towards October."

Sacci said a resurgence of sales and new orders in October also happened before the holiday period. Sales and input prices edged up slightly between September and October 2012.

Sacci said that despite the positive activity index, the increase in labour costs, higher utility tariffs and a notable weakening of the rand in October would negatively impact trade prices.

The six-month trade expectations index (TEI), which measures consumer feel about the projected period, slipped to 53 in October from 55 in September.

"In the first quarter and second quarter of 2012 the TEI averaged 65 and 61 respectively. The uncertain circumstances in the South African economy continued to taint the outlook for trade conditions."

Sacci said there was often a wide gap between the TEI and the TAI.

"The small margin is an indication of uncertainty and reduced optimism about the short-term," iti said.

"The expectations for sales and new orders remained under pressure... [however] supplier deliveries are expected to remain stable as it appears to have been resilient in the face of the transport strike."

Employment conditions in the trade environment became tighter in October and stayed in the negative as the employment index declined by one point to 47.

Employment prospects were also down. The index registered 46 in October compared to 49 in September 2012.
Sacci said the present labour market instability was creating a negative impact on employment opportunities.
 
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