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Components|Energy|Environment|Export|generation
Components|Energy|Environment|Export|generation
components|energy|environment|export|generation

Trade conditions expected to improve – Sacci

16th July 2024

By: Schalk Burger

Creamer Media Senior Deputy Editor

     

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The broader agreement by a Government of National Unity (GNU) on the need to address economic challenges collaboratively has filtered through to the trade environment, and the May and June South African Chamber of Commerce and Industry (Sacci) Trade Conditions Surveys reflected a more positive tendency.

Trade conditions recovered gradually as the Trade Activity Index (TAI) reached its best level in June this year, having started off from a depressed level early in the year.

Although still in negative territory, with only about 47% of respondents positive about prevailing conditions, the six-month expectations of respondents increased further, with 55% expecting trade conditions to improve, the chamber says.

Important trade components such as sales and new orders remained at improved levels in May and June. Supplier deliveries were unchanged, with lower inventory levels suggesting increased sales volumes.

The expected increase in sales volumes, new orders and supplier deliveries indicates the current optimism in the trade environment.

Further, continuing high input costs were still prevalent, although sales prices were relatively stable.

However, respondents expect that sales prices and input costs will rise over the next six months.

This potential future trend of rising prices may uphold inflationary pressures and cause the South African Reserve Bank to delay its decision on an easier monetary stance and lower interest rates, Sacci highlights.

The latest data releases on several trade activities also confirm the tight trade conditions that prevailed in the first six months of this year.

Real activity in the wholesale and retail trade, hotels and restaurants sector declined by 1.8% y/y in 2023, and decreased by a further 2.3% y/y in the first quarter of this year.

Retail trade volumes only rose slightly by 0.6% y/y in April, while new-vehicle sales for the first half of this year were 7.5% lower year-on-year.

Merchandise import volumes were 9.1% lower and merchandise export volumes were 4.9% lower in the first five months of this year than in the corresponding period of 2023.

"More stable energy supply, augmented by increased electricity generation by the public and private sectors and lower fuel prices over the first six months of 2024, contributed positively to trade conditions."

However, trade conditions had a relatively lesser effect on employment conditions in this sector. Currently, 43% of respondents continue to hire staff, while 40% of respondents are considering increasing employment in the next six months, Sacci says.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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