Trade conditions deteriorated in February and March 2022 after bordering on positive territory in January 2022 as economic growth remained sluggish, the SA Chamber of Commerce & Industry (Sacci) reported on Thursday.
Sacci’s Trade Activity Index for the first quarter of 2022 fell to 43.1 in the first quarter of 2022. from 48.1 in the fourth quarter of 2021 as lower export volumes due to logistical issues at ports, supply chain disruptions, and rising inflation and interest rates led to cautionary and selective spending by businesses and households.
Sacci CEO Alan Mukoki said that while Covid-19 restrictions had assisted in easing economic conditions, the Russia-Ukraine conflict had increased global uncertainty.
Trade expectations for the next six months have also fallen, with the index falling 6.9 index points month on month, Mukoki said.
The Trade Activity Index is a composite of sales volumes, new orders, supplier deliveries, inventory levels and employment. At 50 the index indicates no change while a reading above or below 50 implies a positive or a negative reading.
The data shows that sales volumes, supplier deliveries, and inventories were all negatively affected in February. Although sales volumes improved slightly in March, new orders, in particular, remained subdued.
On a positive note, expectations for all major trade components improved significantly in March, with the seasonally adjusted index increasing by 17 index points between February and March 2022.
Sacci economist Richard Downing said inflationary pressures continue to loom on both the input cost and demand sides, and respondents expect the inflationary process to accelerate.
Rising fuel prices, wage demands and higher interest rates are putting a strain on business profitability in the trade environment, and more than 80% of respondents anticipate rising sales prices and input costs, Downing said.
“Respondents listed load-shedding, dysfunctional local governments, law and order, and logistical transport issues as pressing external factors restraining trade conditions,” he said.
Wage demands that were unaffordable in the present economic climate have contributed to tight and negative employment in the trade sector, he added.
“Only 28% of respondents said they were hiring more people right now, despite the fact that improved trade expectations may result in more job opportunities, which are still in the negative,” Downing said.
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