The Trade Activity Index (TAI) reached its highest level, so far, in 2009, in August, registering 44 points, the South African Chamber of Commerce and Industry (Sacci) reported on Thursday.

Although still below the neutral 50 point level, this was two points higher than the 42 points recorded in July and a 14 point improvement on the low of 32 points recorded in April, with Sacci noting that the "steady recovery" appeared to be sustained.

The sales and new orders subcomponents of trade activity displayed a mixed performance when compared with the June and July levels, the chamber added.

The subindex on sales volumes dropped to 45 points, down two points from the 47 points recorded in July, while the new orders subindex improved to 45 points, compared with 42 points in July, pointing towards a recovery in the longer-term sales volumes.

Supplier deliveries also improved to 42 points, up from the 39 points recorded in July, thereby confirming its path to recovery, stated Sacci, adding that the increase in the inventory subindex to 45 points, compared with 40 points in July, was further evidence of improving trade conditions.

Selling prices, meanwhile, increased to 53 points, up from 51 points in July, while input prices dropped by one point to 58 points.

Inflationary pressures, therefore, appear to be contained for the moment, the chamber highlighted.

Continued optimism was, once again, evident in the Trade Expectations Index (TEI), dropping only one point to 55 points in August.

The TEI has been improving since March, with the August and July figures recording the highest TEI levels for the year.

Sales expectations were upbeat as the August figure of 64 points consolidated the much improved reading of 65 points for July, said Sacci.

Expectations for new orders remained on 58 points, while the index on supplier delivery prospects also stabilised on 54 points.

Sacci highlighted that all prospects for trade activity, apart from employment prospects, were in positive terrain in August.

Current employment conditions in the trade environment improved marginally and the employment index rose by one point to 42 points in August.

Employment prospects, however, dropped to 44 points, compared with 46 points in July.

"The implication of these movements is that even when employment recovers, the recovery will not be a consistently smooth path, but a path that is reflective of an arduous economic recovery," stated Sacci.

It added that, while there is a more positive outlook for most aspects of trade conditions six months ahead, inflationary expectations for the next six months had increased, as the indices on expected input prices, at 63 points, and sales prices, at 58 points, each rose by two points.

The upward pressure on inflation was the result of higher administered prices, higher crude oil prices and a wage rate in access of inflation, noted the chamber.