Seventy per cent of respondents to the South African Chamber of Commerce and Industry’s (Sacci’s) trade conditions survey for January were negative about trade conditions.
The Trade Activity Index (TAI), at 30 in January, was at its lowest level since inception of the survey in 2000. The prior lowest level for the TAI was 32 in April 2009 after the recession of 2007/8.
The seasonally adjusted TAI slipped by 17 index points between December and January. “It appeared that a notable change occurred in the seasonal patterns of trade conditions owing to the Black Friday phenomenon in November. The TAI was, nonetheless, down 14 points compared to January 2018,” said Sacci.
Trade expectations for the next six months remained negative, although not as depressed as present conditions, with the seasonally adjusted Trade Expectations Index (TEI) down by four index points from December’s 45 points.
The TEI was 18 points below the January 2018 level of 60, partly owing to high expectations in January last year, following the ruling party’s decision to elect Cyril Ramaphosa as President.
“Although 2019 looks more promising, it still points to the reality of continuing political uncertainty, high unemployment, load-shedding, land reform, a subdued local and world economy, compliance cost of the regulatory environment, strikes and wage demands that exceed inflation and stifle the trade environment,” Sacci stated.
The sales subindex declined by eight index points to 35 in January, while the new orders index dropped by one index point to 32. The sales outlook also deteriorated as the index declined by four index points to 46. Expected new orders slipped by three index points.
The weak trade conditions caused the sales price index to drop by ten index points – suggesting defensive reaction to improved sales volumes - while input prices also dropped with the January index 14 points lower.
Sales and input prices are expected to drop by five and six index points, respectively, over the next six months, implying muted inflationary pressures in the trade environment. A stronger rand and lower fuel prices could further contribute thereto.
The employment subindex declined substantially by 15 points to 24 in January, while the six-month employment outlook also deteriorated moderately with the index declining by three index points to 38.