Trade conditions in SA weaker in April – survey

Trade conditions in South Africa remain tight – actually weakening in April 2018, according to the latest Trade Activity Index (TAI), released by the SA Chamber of Commerce and Industry (Sacci) on Wednesday.

According to Sacci, these weakening trade conditions are reflected by lower sales volumes, weak new orders and declining supplier deliveries.

Respondents to Sacci's Trade Conditions Survey – of which the TAI forms part – said the fuel price increase affected turnover by putting profit margins under pressure. Bigger clients also seem to be lengthening the credit cycle, influencing cash flow.

The Trade Conditions Survey indices vary between 0 and 100. At 50, an index reflects a "no change" situation. Above or below 50 implies a positive or negative reading, depending on the trade component.

The survey found many businesses had become dependent on exports "due to the regulatory environment in SA", but the stronger rand is reducing income in rand terms.

"The requirements to adhere to ownership prescriptions in SA are having negative effects on manufacturing businesses. The increase of VAT to 15%, the higher fuel levy, strikes, and looting and property damage at certain locations, had a negative effect on trade activity," Sacci said in its survey report.

• READ: Business confidence key to restoring SA economy, says Sacci as BCI dips in April

Sacci's Trade Conditions Survey for April 2018 measured 39, after recording 43 in March 2018. The six-month Trade Expectations Index (TEI), however, increased slightly to 54 in April 2018 after recording 52 in March 2018.

Although current trade conditions are more restrained than in April 2017 – with the TAI measuring six index points lower in April 2018 than a year ago – trade expectations are actually better than a year ago, with the TEI being two index points above the April 2017 level.  

Sales volumes slipped in April 2018, with this sub-index 11 points lower at 35, compared to 46 in March 2018. The new orders index was only slightly down – by one point – to 34 in April.

Expected sales volumes and expected new orders were both higher. The expected sales sub-index went from 58 to 61, and the expected new orders sub-index went from 51 to 54 between March and April 2018.

The sales price sub-index was up by two index points to 61 month-on-month, while the input price sub-index remained unchanged at 72. Sacci said the increase was caused by the introduction of taxes and levies in Budget 2018, a rise in the crude oil price, and a weaker rand. Price expectations, however, mainly kept to the same levels as in March 2018.  

The employment sub-index improved by one point to 43 in April 2018, while the six-month employment outlook sub-index increased by six index points to 52 in April 2018. Sacci pointed out that employment sub-indices remained "erratic".