Trade conditions in SA remained negative in June, but showed some signs of improvements from its previous glum readings, according to the latest trade conditions survey from the SA Chamber of Commerce and Industry (Sacci).
The seasonally adjusted reading of the survey’s trade activity index (TAI) component — which includes sales volumes, new orders, supplier deliveries, inventory levels and employment — improved three points from May to 46 in June.
But businesses expect things to improve down the line as the survey’s six-month trade expectations index (TEI) also advanced three points on a seasonally adjusted basis to 53 in June.
Ranging from 0 to 100, a score of 50 is the neutral mark for the survey. Anything greater than 50 is positive and below 50 negative.
Sales volumes declined in May and June, along with new orders, leading to greater inventories.
Almost four out of every five respondents reported it absorbed rising input costs to help consumer demand, but consumers are facing pressures of their own amid high inflation and interest rate hikes, while load-shedding is affecting all South Africans.
“Higher debt levels and increased interest rates have resulted in higher debt servicing costs, negatively affecting real demand from clients and impacting the financial position of businesses,” Sacci said.
Despite the decline in current sales volumes, respondents expect this to improve in the next six months, as this score jumped 11 points month on month to 66 in June.
“Over the next six months, there is a possibility of marginal decreases in sales prices and input costs, as the inflationary pressures are expected to ease further,” Sacci said.
SA’s headline inflation slowed to its lowest reading in 20 months on Wednesday, falling to within the SA Reserve Bank’s target range of 3%-6%.
This supports the view that the Bank might keep the repo rate steady at Thursday’s monetary policy committee rate announcement after successive interest rate hikes to tame high inflation.
Supply chain challenges were still evident in May, but showed some improvement in June.
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