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The results from the February 2024 Survey of Trade Conditions by SACCI confirm a rough trade environment that began to deteriorate lately since October 2023. The 28-index point recorded for the TAI (Trade Activity Index) in January 2024 was the worst level since April 2020 (TAI at 25), i.e. after the Covid State of Disaster was announced in March 2020. Although there was a minor improvement between January and February 2024, 69% of respondents in general still experienced February 2024 trade conditions as negative. Seventy-nine percent of the participants viewed the February 2024 trade conditions as worse than a year ago. Six-month expectations lifted somewhat but only 43% had positive expectations about future conditions. Seasonal factors did not play a significant role in the deterioration of trade conditions.

All elements of trade improved in February 2024 though it was from the historic low base in January 2024. Twenty-six percent of respondents experienced higher sale volumes in January 2024 which improved to a meagre 34% sighting increased sale volumes in February 2024. New orders also showed a slight improvement in February.

Input cost slowed further with only 56% of respondents recording rising input costs in February. This led to a significant easing in sales price rises as only 38% of respondents recorded sales price increases. This also implies a notable drop in inflationary expectations as both input costs and sales prices might decline further over the next six months. The SA Reserve Bank may possibly consider easing its monetary stance on interest rates.

The real output of the wholesale and retail trade, and hotels and restaurant, sector declined by 1.7% y/y in 2023 after growing by 3.5% y/y in 2022. A number of trade activities are touched by the cumbersome trade conditions. Logistical problems at harbours and rail transport have limited merchandise global trade especially low-value-high-volume exports and which contributed to the more difficult trade conditions. Tourist services are still in the recovery phase while new vehicle sales although lower, appear to have stabilized. With households struggling to make ends meet, retail trade volumes were lower in December 2023 but benefited from Black Friday in November 2023. Lower interest rates could help to stabilize retail trade activity and enhance household spending. Electricity supply, however, continues to affect trade conditions – notably the additional cost to provide other sources of energy and stock losses of perishable goods.

The considerable rough trade conditions have affected employment relatively less. Thus, in January 2024, 34% of respondents were still hiring staff - which increased to 38% in February 2024. The prospects for additional employment in the trade sector in the next six months remain limited.

Issued by SACCI