Current trade conditions, as reflected by the Trade Activity Index (TAI), recovered to a seasonally adjusted 48 in August from the sharp dip to 38 in July, data released on Tuesday by the South African Chamber of Commerce and Industry (Sacci) showed.
Trade conditions improved on the levels of June and July 2011 but remained in negative territory, according to Sacci.
“The sharp decline was partly caused by the disruptions following strikes in July 2011. On an unadjusted basis, the TAI was in negative territory since April 2011 and seven points below the last positive reading in March 2011. The swifter resolution of labour disputes in August 2011 contributed to the ‘normalisation’ of the trade environment,” Sacci said.
The sales volumes index recovered to 53 after dipping to 39 in July 2011. All components of trade activity performed better than in July 2011. The input price index decreased by three index points in August 2011 after increasing by six points to 66 in July 2011. The sales price index is unchanged at 56 for three consecutive months after declining from 58 in May 2011. Inflationary pressures currently appear to be contained although operating costs are still vulnerable to higher prices of imported goods, utility services and labour costs.
The 2011 strike season had a negative impact on employment conditions with the index on employment in the trade environment dipping to 42 in July and only partially recovering to 45 in August 2011. The employment prospects index (for six months hence) also remained in negative territory at 49 in August 2011.
“Given the uncertain businesses and economic climate, the trade sector finds it difficult to accommodate above-inflation wage settlements while maintaining the current size of the workforce. The potential implications for employment in the broader economy remain concerning,” Sacci stated.
Expectations in the trade environment also recovered in August 2011. The TEI (Trade Expectations Index) registered 57 — still eight points below the high of February 2011 level but five points better than in July 2011.
“The trend toward negative territory seems to have abated. The outlook for all elements of the trade expectations survey improved. The index on sales expectations increased to 64 from 58 points in July, while the expected new orders index increased by six points. The expected supplier index marginally improved to 55 after increasing to 54 in July 2011 indicating stable supply conditions. The sales and input price expectations indices rose by three points each to 65 and 69 in August 2011 reflecting higher inflationary expectations by most of the respondents. Rising costs such as fuel and other utility services are expected to continually put trade margins under pressure,” Sacci said. — I-Net Bridge