Trade conditions show recovery in May

Trade conditions showed a recovery in May, the South African Chamber of Commerce and Industry (Sacci) said on Tuesday.

The chamber’s Trade Activity Index (TAI), which measures current trade conditions, recovered from 32 in April to 40 in May 2009.

“The fewer working days in April had a profound effect on trade conditions that led to the lowest level for the TAI since the survey started in August 2000,” Sacci said.

However, trade conditions more than recovered their pre-April 2009 level in May.

“The TAI nonetheless remained low although sales volumes were making promising gains in May 2009 towards positive territory,” Sacci said.

It said all the demand sub-components of trade activity, except inventories, improved on their April 2009 levels.

The sub-index on current sales volumes gained 15 points compared with April 2009; the new orders sub-index gained nine points; and the backlog sub-index gained seven index points compared to the previous month.

Supplier deliveries also recovered markedly by nine index points, Sacci said.

“The easing price pressures of the last few months paused in May 2009 as the selling and input price indices rose by one index point each to 49 and 56 respectively,” it said.

It added that inflationary pressures were contained, as the prices of imported producer goods declined by about 15% in April 2009 and the prices of locally produced goods rose by only about 3% in April.

“The input price index is still considerably lower than its high of 84 in June 2008,” Sacci said.

Turning to trade expectations, Sacci said that respondents remained relatively optimistic in looking six months ahead.

However, the Trade Expectations Index (TEI) was slightly down to 46 in May 2009 from 48 in April 2009.

“The outlook for trade appears to have retained its improved position of April 2009.

“Global trade and global economic conditions are also showing signs of revival,” Sacci said.

The TEI sales sub-index was four points down on the May 2009 survey but, at 50 still bordered on positive territory.

The expectations’ new orders sub-index also lost three index points and registered 47 in May, while the expected supplier deliveries sub-index lost two points to decline to 43 in May 2009.

“Although these sub-elements of trade have been declining between April and May 2009, they are still above the February and March 2009 levels,” Sacci said.

Inflationary expectations increased as the indices on expected input and sales prices each increased by four points in May 2009.

This implied that inflation was expected to start rising again towards year-end.

Sacci said the stronger rand could assist in containing the prices of imported goods and services, notably fuel.

Current employment conditions in the trade environment remained almost unchanged at 40 in the May 2009 survey, while the employment prospects sub-index improved slightly by two index points to 43 in May, Sacci said.—Sapa