Trade conditions improve


14 June 2012

South Africa’s trade conditions improved in May, the SA Chamber of Commerce and Industry (Sacci) reported on Wednesday.

Its seasonally adjusted Trade Activity Index (TAI) gained five points to measure 56 for the month.

“The better conditions are in correspondence with the relatively strong growth in the wholesale and retail trade, hotel and restaurant sector,” Sacci said in a statement.

The non-seasonally adjusted TAI stood at 55 last month, compared to 48 in April and 49 in May last year.

Sales and new orders recovered strongly to 64 and 58 compared to 50 for both indices in April 2012. A year ago the sales volume index was 56 and the new orders index 46.

The inventories index increased moderately to 51 from 47 in April 2012, following strong inventory build-ups in both February and March 2012.

Supplier deliveries recovered by six index points.

“The fewer trading days in April played a significant role in weaker trade activity in April 2012 compared to May,” said Sacci.

Indices for sales and input prices decreased from 63 and 72 in April to 59 and 68 respectively in May. Price pressures moderated despite an average rise in administered prices of 12 percent.

“The effect of the weaker rand is yet to trigger higher prices,” the chamber said.

Trade expectations remained positive, but tapered down in May.

“Expectations are following the same pattern as in 2011, where the initial bullish outlook was moderated during the year,” said Sacci.

“Weak economic conditions will continue to weigh on trade conditions in the coming months.”

The six-month outlook for key components of trade activity contracted in May. Sales and input price expectations eased to 61 and 68 compared to 68 and 75 respectively in April.

Inventories were expected to decline further.

Employment conditions in the trade environment worsened during the month as the index moved from 43 to 41 in negative territory. The outlook for the employment index weakened to 49, from 55 in April.