SA trade conditions remain tight - index | Fin24
 
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SA trade conditions remain tight - index

Feb 13 2020 17:22

Tight trade conditions have continued to suppress sales prices in South Africa, according to the latest Trade Activity Index issued by the SA Chamber of Commerce and Industry in Thursday.

Half of respondents reported unchanged selling prices. In January 2020 sales and new orders were well into negative territory, the TAI shows. According to Sacci, this reflects rigid and low demand.

At the same time, 65% of respondents continued to experience rising input costs – putting profits and the viability of business under pressure.

The index shows that external conditions that continued to affect the trade environment included a lack of general business confidence; decreased real disposable household income; the cost of living that exceeds general inflation; job losses; and a weakening rand.

"Lack of service delivery does not justify the tax and tariff burden of some municipalities. The erratic energy supply due to electricity blackouts and cable theft hampers trade with the costs of fuel and alternative energy supplies playing havoc with input costs," Sacci commented in a statement.

"Though the lowering of the repo rate by the SA Reserve Bank in January was a positive move which improved trading conditions – although at a depressed level - tight trade conditions remained."

The January TAI shows 57% of respondents experiencing negative conditions while 54% of respondents expect conditions to remain depressed in the next six months. The average for the TAI for 2019 was 39, implying that 61% of respondents experienced tough trade conditions in 2019.

Furthermore, employment opportunities remained scarce with the sub-index virtually unchanged at 44 compared to 45 in December 2019. The Trade Expectations Index (TEI) indicates that employment prospects for the next six months remain subdued.

Fin24 reported on earlier this week that SA's retail industry experienced a contraction in consumer spending for the month of December, according to Statistics SA. Furthermore, consumer confidence slumped into negative territory in 2019.

* Compiled by Carin Smith

sacci  |  trade  |  inflation  |  retail
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