Economic Reality Dictates Trade Conditions, Says Sacci As TAI Falls To 47

17 December 2020 – After having increased to 51 in October, the South African Chamber of Commerce and Industry’s (Sacci’s) Trade Activity Index (TAI) decrease to 47 in November – back in negative territory.

Sixty-seven per cent of respondents had indicated that trade conditions in November were worse than in November 2019, while initial feedback on Black Friday also suggests that businesses experienced less activity than anticipated.

“Greater realism and disappointment with Black Friday made respondents less positive on the outlook for trade conditions in the next six months,” reports Sacci, pointing out that the Trade Expectations Index (TEI) had dipped to 43 in November from an upbeat level of 54 in October and 56 in September.

Trade components like sales volumes, new orders and supply deliveries dipped notably. The sales subindex decreased by ten index points to 57 in November, while the new orders index decreased by seven index points to 50.

“Although probably disappointed with Black Friday, sales volumes were nonetheless still well into positive territory. The backlog on orders and inventories were less affected and better than even the improved September levels,” Sacci notes.

It adds that the tight trade conditions had filtered through to prices, with present and expected sales and input prices having remained virtually unchanged from the October to the November surveys. 

“In general, respondents saw the continuing Covid-19 lockdown process, the general economic situation, input costs – especially staffing – and adverse conditions in the hospitality industry, as main causes contributing to dampened trade expectations.

“However, certain trade categories such as trading technology and home office related equipment and hardware, experienced improving conditions,” Sacci points out.

Meanwhile, employment conditions in the trade sector weakened in November after having improved in October. The employment subindex declined from 48 in October to 43 in November, with employment expectations also dipping from 42 in October to 38.

“In the near future, it does not seem evident that the trade sector will contribute to alleviate the present high unemployment challenge,” says Sacci. Source(Engineering News)