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Cape Town - Trade expectations for the next six months is now well into positive territory, according to the Trade Expectations Index (TEI) for December released by the SA Chamber of Commerce and Industry (Sacci) on Wednesday.
Respondents surveyed listed skill shortages; mentoring; fuel price hikes; access to and cost of funding; job uncertainty; an uncertain regulatory uncertainty in some sectors; and political instability as constraining factors for trade.
"The significantly stronger but unstable rand against currencies of major trading partners; high real interest rates; and high unemployment have had a dilatory effect on trade," explains the Sacci index report.
The TEI registered 60 (out of 100) in December compared to 59 in November.
The TEI report, however, points out that trade conditions in December were restrained due to seasonal factors: In December there are usually low business-to-business trade.
The seasonally adjusted Trade Activity Index (TAI) increased from 41 in November to 48 in December.
"All elements of trade, excluding employment, declined in December compared to November 2017. Compared to December 2016, the December 2017 TAI was three index points lower, while the TEI was slightly higher by two points in December 2017.
"Apart from the tougher prevailing trade conditions since September 2017 reflecting the sluggish economy, the slower pace of household, government and capital spending is also the result of tight financial conditions and high debt levels," the Sacci report states.
Sacci expects that, given the present uncertainty of political and economic direction, nominal interest rates will remain unchanged despite lower inflation.
In its view, the upcoming national budget in February will also set the scene for trade conditions going forward.
Sales and employment
The employment sub-index increased to 44 in December 2017 due to more temporary staff at retail, catering and accommodation outlets (during the festive season).
The employment outlook index for the next 6 months improved by an encouraging 6 points in December 2017 to 55 after the rising trend of 8 points between October and November 2017.
The TEI shows that sales volumes decreased further in December 2017 with this sub-index declining from 49 to 41, while the new orders index dipped from 45 to 40 in December 2017.
Expected sales volumes and expected new orders improved notably to 66 and 62 respectively in December 2017. Stock levels declined slightly in December 2017, but are expected to increase over the next six months.
The sales price index remained around 50, although the input price index increased marginally by 2 points to 68. Price expectations were mainly unchanged, but remained high with the sales and input price expectation indices correspondingly at 70 and 79.
"The high fuel price is worrying, although the more modest electricity tariff increases have been welcomed by the market," the report states.
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