The trade outlook in December remained well into positive territory, but present trade activity is still in negative territory, according to business organisation the South African Chamber of Commerce and Industry’s (Sacci’s) latest Trade Conditions Survey.

The survey suggests that although some structural economic impediments may be resolved, the poor economic performance at present is preventing trade from reaching its more optimal potential.

However, 40% of respondents indicated that present trade conditions were nonetheless better than in December 2023, the business organisation points out.

Trade conditions have slowed down since August and deteriorated even further, with only 35% of respondents experiencing positive conditions in December. However, the outlook for trade in the next six months improved notably, with 65% of respondents in December compared with about 54% of respondents in October being positive.

Further, the sales volumes index of 37 in December shows that the majority of respondents find trade conditions demanding. Increased new orders dipped to 28% of respondents.

The difference of 26 index points between present supply deliveries and expected deliveries reflects the logistical problems currently experienced, mainly with rail and sea transport. Lower stock levels confirm the existing tight trade conditions.

The six-month sales outlook is nevertheless at a high level, with 72% of participants anticipating better sales compared with 58% in October, Sacci highlights.

Meanwhile, input costs eased somewhat as the index shed nine index points between October and December, while sales prices rose by a modest two index points between November and December.

It is expected that both input costs and sales prices will accelerate in the next six months. As inflationary expectations may rise, it could deter an easier monetary stance and cause the South African Reserve Bank to continue a cautious approach.

However, with lower consumer inflation, at 3%, and producer prices declining, by 0.1%, in November, a bolder lowering of interest rates may be appropriate, the organisation emphasises.

Recently released data on some trade activities suggest that, despite slow economic growth and high unemployment, trade experiences are diverse.

The latest data indicates dissimilar year-on-year performances, with retail sales volumes up by 6.3%; merchandise export volumes down by 9.3%; the real value of building plans passed up by 16%; merchandise import volumes down by 4.6%; wholesale trade sales up by 3.4%; and new-vehicle sales up by 2.5%.

Additionally, despite challenging trade conditions and tight profit margins, employment in the trade sector was relatively stable, with respondents employing staff in November, at 45%, and in December, at 41%, while 57% intend to employ more people in the next six months.