The South African Trade Activity Index (TAI) declined to 52 in April from 56 in March, reflecting a pull-back in trade conditions which was attributed to the number of trading days lost in April because of public holidays.
However, the figure is still higher than the 50 recorded in February, the 47 recorded in January and December’s figure of 49.
“Trade conditions pulled back in April 2006 as part of a normal seasonal pattern due to trading days being lost during the month of April. Trade conditions, however, are now well rooted in positive territory where they will probably remain in the first half of 2006.
“Sales volumes slowed in April and new orders also dipped but supplier deliveries and backlogs on orders remained constant. Although more respondents saw selling prices increasing, fewer respondents experienced higher input prices. Inflationary pressures were therefore rather mixed and subdued,” the South African Chamber of Business (Sacob) said.
“Surprisingly, notwithstanding nominal wage demands exceeding inflation, job prospects improved. Lower wage levels may even result in more job opportunities
being created,” it added.
The TAI is compiled by Sacob and sponsored by commercial bank Absa.
The South African Trade Management Indices (SATMI), which consist of the TAI and the Trade Expectations Index (TEI), are modelled on the Institute of Supply Management (ISM) index of the United States, which measures manufacturing activity, but the SATMI also cover the services sector.
The break-even level is 50, so a reading above 50 implies expanding trade activity.
The TEI, which measures prospects for the next six months, rose to its highest level of 70 in April from 66 in March and 67 in February.
“Sales expectations returned to 82 index points in April 2006 and matched the
level of January 2006. Inflationary expectations for the next six months are mixed with the indices on sales prices increasing to 65 from 64 and input prices remaining on 68.”
According to the survey, favourable trade conditions are expected to continue at least until October 2006.
Special features of expectations included sales regaining momentum, no additional inflationary pressures, input costs increasing by more than inflation, inventory levels rising, and pressure on suppliers. – I-Net Bridge