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Trade conditions in South Africa deteriorated further in June 2018, according to the latest Trade Activity Index released by the SA Chamber of Commerce and Industry (Sacci) on Tuesday.
The index moved further into negative territory (therefore below 50) and was 37, compared to 40 in May 2018.
Respondents are concerned about the depressed economy, political uncertainty, the weak rand exchange rate, and the continued increase in fuel prices.
They also indicated that late deliveries and complementary businesses closing down or shrinking their activities are disrupting trade conditions.
The survey’s Trade Expectations Index (TEI) for the next six months also moved to negative territory by declining from 51 in May, to 49 in June 2018. This was the first time this year the TEI moved into negative territory and the June 2018 level is at about the same level as in June last year.
According to the Sacci report, the current weak trade conditions are marked by 71% of respondents experiencing decreased sales volumes, and 68% of respondents subject to decreased new orders.
Compared to June 2017, trade conditions were more restrained in June 2018, with the TAI 11 index points lower than last year.
Sales volumes and new orders
According to the survey, sales volumes are under severe pressure with this sub-index, 7-index points lower than the 36 measured in May 2018.
The new orders sub-index was down by 4 points to 32, while the expected sales volumes sub-index, although at a positive level at 53, was at its lowest level in 2018.
The expected new orders sub-index was also lower at 50; declining from 52 in May.
Sacci points out that subdued trade activity and decreased sales will cause slower turnaround and reduced inventory holdings.
“The subdued trade conditions are accompanied by rising sales prices, with 57% of respondents indicating rising sales prices, and the sub-index remaining virtually unchanged in June 2018,” states the index report.
“The input price sub-index rose by 3-index points to 68. Price expectations also point to sticky higher prices, even with 75% of respondents experiencing higher input costs.”
Lastly, the employment sub-index stayed in negative territory at 45, compared to 44 in May 2018.
The six-month employment outlook sub-index declined by 2-index points to 43. According to Sacci, this is implying rigid employment conditions in the trade environment.
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