Sacci Says Trade Activity Improving

15 October 2020 – Trade activity has improved in South Africa, with the seasonally adjusted Trade Activity Index (TAI) having measured 50 index points in September, implying that half of the respondents experienced better conditions than in August.

Trade activity previously improved to 37 index points in July, and then to 41 index points in August and to 47 index points in September.

However, compared with September 2019, only 31% of the respondents experienced improved trade conditions, the South African Chamber of Commerce and Industry (Sacci) reported on October 14.

The chamber also noted that 56% of respondents expected trade conditions to improve in the next six months as trade activity continues to recover. This is an increase from the 44% of respondents in September 2019 who were positive about the months ahead, albeit from a better-performing economy.

Sales volumes and new orders both increased from continuing low levels in July, but moved beyond the lockdown restriction numbers. However, Sacci said both sales and new orders were still constrained by the dual impact of a recessionary economic environment and junk investment status in South Africa.

About 57% of respondents experienced better sales and 48% saw new orders rising, while supplier deliveries and inventories were still experiencing restraints in September as both subindices registered 40 index points as it continues to improve on difficult August levels.

Expectations for sales and new orders in the next six months also recovered, with 60% and 59% of respondents expecting increases in both components correspondingly.

About 55% of respondents also expect supplier deliveries and inventories to rise over the next six months, and sales prices are expected to decline further under the sluggish demand conditions, although input costs are expected to ease somewhat, but remain high, weighing on profit margins.

Employment conditions, meanwhile, weakened notably up to August, where only 30% of respondents were employing more people. However, employment in the trade environment has since improved, with 43% of respondents suggesting employing more people in September than in August.

In the September survey, 45% of the respondents have indicated that they may employ more people in the next six months, which is slightly down from the 47% in August. Source (Engineering News)