South Africa: Trade conditions move into positive territory

Pretoria – Trade conditions in November moved into positive territory, the South African Chamber of Commerce and Industry (SACCI) said on Wednesday.
“The SACCI Trade Conditions Survey for November 2011 indicates that trade conditions moved into positive territory as the trade activity index (TAI) that measures present trade conditions, improved by three points to 53 in November,” said the chamber on its monthly release.

In September, SACCI said overall trade conditions had been in negative territory since April.

The seasonally adjusted TAI was at 49 points, increasing by one point from 48 in October.
The seasonally adjusted TAI also stood at 53 in November 2010.

“Although retail sales usually have the highest sales volumes in December, the TAI has its heightened activity in November, reflecting high volumes of business-to-business trade before year end,” said SACCI.

In November, the sales volumes index improved to 60 from 52 after increasing by three points in October, while the inventory index came down by four points in November given the increased sales in November.

While all the other components of trade activity increased, the employment index declined by two points to 46 in November.

According to the survey, expectations in the trade environment declined by two points with the Trade Expectations Index (TEI) measuring 53 in November. However, the TEI remains five points below the 58 of November last year.

Meanwhile, the outlook for sales, new orders, employment and supplies for the next six months was slightly lower than in October. Expected weaker demand caused the backlog on orders index to decline.

The current sales price index decreased marginally by one point to 60, while the input price index decreased by five index points to 69 in November 2011. SACCI said this was surprising given the sharp increase in producer inflation and other cost increases.

The six-month outlook for sales prices continued to increase to 71 from 70 in October 2011 while expectations for input prices rose by two points in November, which is 13 points above the most recent low of 66 in July 2011.

“Inflationary pressures will become more widespread as the prices of basic inputs such as fuel, public utility services and labour costs enter the general price level. The weaker rand appears to be settling around R8 to the US dollar and will unfavourably impact cost structures and domestic inflation.”

Source: BuaNews – 14 Dec 2011