Trade conditions showed slower improvement in August, coming under further pressure since then, with only about a third of respondents reporting positive trade conditions in October – a level similar to that of October 2023.

This is according to industry organisation the South African Chamber of Commerce and Industry’s (Sacci’s) Trade Conditions Survey for October.

The six-month trade outlook for participants was less optimistic, declining from nearly 70% in July to below 55% in October.

Sacci says trade expectations have adjusted to economic realities following the initial optimism surrounding the formation of a “more politically representative government”.

The organisation notes that certain structural economic impediments have tempered the early over-optimistic outlook. It expects the anticipated improvement in economic performance, which could bolster trade conditions, to take longer to materialise.

The sales volumes index fell from 55 in July to 37 in October, with new orders also declining from 48 to 32.

Supply deliveries and inventory levels have decreased, which Sacci says reflects current tight trade conditions.

The six-month outlook was revised in October, with around 60% of participants anticipating increased sales, down from 71% in July. Inventory levels are also lower.

Between September and October, input costs rose by 11 index points, while sales prices increased by a more moderate 2 index points, which Sacci says indicates cost absorption by businesses.

The organisation expects both input costs and sales prices to rise considerably over the next six months.

Despite the current slower pace of consumer and producer price increases, inflationary expectations may heighten, potentially influencing a cautious monetary stance from the South African Reserve Bank, Sacci points out.

Although consumer inflation (3.8%) and producer inflation (0.9%) trended lower in September, a more substantial reduction in interest rates could stimulate real demand, potentially improving trade conditions in the short term, the organisation highlights.

Recent data on trade activities, despite a challenging economic environment marked by slow growth and high unemployment, show mixed results.

Year-on-year changes include that retail sales volumes rose by 3.2%, merchandise export volumes were up by 2.6%, and the real value of building plans passed increased by 2%.

In contrast, merchandise import volumes fell by 6.8%, new vehicle sales increased by 5.4%, and merchandise exports to neighbouring countries grew by 0.5%.

Sacci says that these figures indicate that trade has been generally positive compared with a year ago.