The South African Chamber of Commerce and Industry’s (Sacci’s) August Trade Conditions Survey shows that present trade conditions and prospects remain tight and in negative territory, the chamber said in a statement on Wednesday.

Trade expectations for the next six months, as reflected by the Trade Expectations Index (TEI) decreased from 45 to 44 in August.

The seasonally adjusted Trade Activity Index (TAI), which measures prevailing trade conditions, improved marginally but also remained in negative territory at 44, compared with 43 in July.

“The negative sales conditions of July improved somewhat in August, as only 56% of respondents experienced declining sales volumes, compared with a notable 63% in June.

Trade prospects were more constrained in August this year than was the case in August last year, with the TEI ten index points lower.

Price trends suggest low demand pressures, with input costs pushing prices higher and feeding inflation. It remains difficult, however, to raise sales prices owing to subdued demand in the economy.

“The restrained trade conditions apply pressure on sales prices and costs, putting profit margins under severe pressure. Fifty-nine per cent of respondents, nonetheless, indicated rising sales prices in August, compared with 55% in July.

“The input price index rose by a significant 12 index points to 83. Price expectations point to higher prices in the medium term, with 81% of respondents expecting higher input costs,” Sacci said on Wednesday.

Respondents saw sales volumes improving after the severe dip in June. The sales volume subindex was 44 in August – two index points up on July. New orders improved notably from the low level of 35 for the subindex in July, to 41 in August.

However, the prospects for sales in the next six months continue to be depressed, as the sales volumes index moved further into negative territory, from 49 in July to 45 in August. The index on expected new orders was also lower at 42 – declining by two index points in August.

The employment subindex was stable at 39, but the six-month employment outlook index declined by a further four index points to 38 – implying job shedding in the medium term if trade conditions do not improve.

Respondents also raised matters that particularly affected the trade environment, namely tough downstream and upstream conditions that are constraining trade. The inability to overcome the intricate, and tough, trade environment, concerned respondents.

Strikes, crime and in-house pilferage are placing major impediments on businesses. Input costs, especially the fuel price, a high real wage rate and tariffs of utility services, could have dire inflationary consequences, the chamber said.