/ 16 July 2008

Trade conditions remain flat

Trade conditions remained flat, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday as it released the results of its monthly Trade Conditions Survey for June 2008.

After recovering to a relatively high level of 50 in February, the Trade Activity Index (TAI) steadily declined to 42 in June.

”This is the lowest level since the inception of the SACCI Trade Conditions Survey in August 2000,” read a statement.

June’s level was marginally lower than last month’s 43 and continued to reflect harsh trade conditions.

The sub-index on current sales volumes, after recording a relatively solid level of 55 in February 2008, declined progressively to 42 in June.

The new orders sub-index also confirmed the depressed trade climate and, as was the case in May 2008, remained at 40 in June.

The Trade Expectations Index (TEI), that explores trade conditions six months ahead, gradually declined to 46 in June from a high of 58 in February.

This was the second consecutive month that the TEI registered its lowest level since the inception of the survey in August 2000.

The depressed TEI was a continuation of a downward trend that started in January 2007, from a high of 70, to the current 46.

”It implies poor trade prospects for the next six months,” according to SACCI.

Those trade conditions could level out if financial conditions and cost pressures did not tighten further, it added.

”Trade prospects may stay subdued over the short-term, but there could be an improvement in the medium to longer term.”

The sub-index on sales expectations improved marginally to 52 in May 2008, but again deteriorated slightly to 51 in June 2008.

It was back to the worst level since the survey started in August 2000.

The index on expected new orders for June 2008 remained at 46 recorded in May 2008.

Inflationary pressures remained high although some levelling-off was evident, SACCI said.

The index on selling prices rose slightly to 74 in June 2008 — 14 points above the relatively low index level of December 2007.

The input price index was also 17 points higher than the low 67 in December 2007.

Rising prices remained a strong possibility over the next six months as fuel and food prices internationally continued to reach record levels, while the weaker rand added to price pressures.

The June 2008 employment index declined to 44 after being at 50 in January. Employment prospects in the trade environment remained deep in negative territory in June as the sub-index remained at 45 – Sapa