Trade conditions stay upbeat

Johannesburg - Trade conditions remained positive in October, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday as it released its monthly survey.

The Trade Activity Index (TAI) - which reflects current trade conditions - declined to 51 index points in October from 53 in September.

"This is only the second month since November 2007 that the TAI has been in positive territory. The steady recovery in the index from a low of 32 in April 2009 was supported by the TAI remaining positive in October 2009."

Sacci said the TAI was likely to maintain positive levels in the short-term as the trade environment encouraged greater activity over the festive season and into 2010.

The sales and new orders sub-components of trade activity slowed slightly in October, but were still above the average level for 2009.

The sub-index on sales volumes dipped four points to 56 from 60 in September, but was 11 points above the August 2009 level of 45.

The new orders sub-index also slipped four points in October and was well above the low of 34 in June.

The supplier deliveries index improved to 51 in October from 49 in September 2009, indicating a further easing of supply conditions.

The marginal decrease in the inventory index to 48 was still a 10 point increase on August and further endorsed improved trade conditions and the rebuilding of stock.

The index on selling prices decreased to 49 from 50 in September, while the input price index decreased by two points to 52.

Looking six months ahead, respondents continued to be optimistic, notwithstanding the Trade Expectations Index (TEI) returning to 55 in October following 59 in September.

Sacci said the October TEI figure appeared to be correcting an overly optimistic outlook, but nonetheless remained in positive territory.

Sales expectations pulled back to 64 from 70 in September 2009 and remained in positive terrain.

Expectations for new orders registered 58 - down from 63 in September and following a similar adjustment as other trade variables. The index on prospects for supplier deliveries remained virtually unchanged.

"Although there is a positive outlook for trade conditions six months hence, inflationary expectations for the next six months are growing."

Sacci said the indices on expected input prices remained unchanged and sales prices increased by three points to 59 - the highest since February's 60.

"The expected higher selling prices are partially the result of increased input costs (electricity tariffs, salaries, fuel price)and lower turnover volumes."

Current employment conditions in the trade environment were unchanged in October at 45 for the employment index.

Employment prospects, however, declined to 45 from 48 in September but remained well clear of the low of 39 in February 2009.

- Sapa