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Recession, junk rating dampen trade conditions

Jul 13 2017 14:51

Cape Town - South African trade conditions stayed in negative territory in June with the Trade Activity Index (TAI) still below 50 at 48, the South African Chamber of Commerce and Industry (SACCI) said on Thursday.

The recently announced recessionary conditions and the ratings downgrades are still affecting already subdued trade conditions, according to SACCI.  

Apart from the prevailing depressed economic conditions, TAI respondents in June cited currency volatility, official red tape, instances of corruption, political uncertainty, lack of fixed investment and unpredictable economic policy as impediments to trade.  

The seasonally adjusted TAI, however, improved by a further two index points to 49 between May and June 2017. Since April 2017, the seasonally adjusted TAI increased by 6 index points after the index reached a low of 43 in March 2017.

The TAI was at about the same level in June 2017 as in June 2016.
In June the seasonally adjusted Trade Expectations Index (TEI) also remained in negative territory at 48. The TEI was at about 60 during January and February 2017, but declined to 48 in June 2017.

In June last year trade expectations were positive at 54.

READ: SA trade impacted by side issues - Sacci

Sales volumes

According to SACCI, sales volumes recovered, with the sales volumes index improving to 55 in June 2017.

The new orders index, however, declined to 46. For SACCI this is a confirmation of deteriorating trade expectations.

Expected sales volumes slowed, with the index declining by 2 index points to 52 in June 2017. Expectations for new orders also decreased to 47 from 49 in May 2017.
The inventory index increased marginally to 43 from 42 in May 2017 due to continuing restrained trade conditions, according to SACCI.

The selling price index and the input price index remained virtually unchanged for sales prices (60) and for inputs costs (63).

"Although still high, the price indices concede lower inflationary expectations with the sales price expectations index 4 points lower at 64 in June 2017, but with expected input prices ticking up as the index increased to 71 after declining from 76 in April 2017 to 66 in May 2017," said SACCI.
"The employment sub-index decreased to 47 in June 2017 – 2 index points lower than in May 2017. The employment outlook for the next 6 months improved as the employment expectations index increased by 5 index points to 46 in June 2017."

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