January trade conditions have surprised to the upside, with the South African Chamber of Commerce and Industry (Sacci) reporting on Wednesday that its seasonally adjusted Trade Activity Index (TAI) had improved by six index points from December to reach 62 in the first month of the year.

Encouragingly, the nonseasonally adjusted TAI was 11 points higher than in December and 13 points above January last year.

The chamber said in a statement that, although trade appeared relatively buoyant in January, the probable excess domestic demand would likely find its way towards imports. 

Import volumes were notably higher in the fourth quarter of last year than in the fourth quarter of 2013. 

“The present electricity power constraints will, however, have a negative effect on trade, but perhaps less so than on other sectors,” it outlined.

Sales volumes were, meanwhile, “substantially” higher in January, owing to seasonal lower interbusiness trade during the December holidays, while volumes were much improved on the prior year’s “low” January figure. 

The new orders subindex also improved by ten index points, while supplier deliveries returned to normal as businesses reopened in January and settled above the 50-index point level.

Stock levels were replenished after the holiday period, pushing the index up to 64 from December’s 60 index-point level, while order backlogs increased somewhat in January.

Sacci noted that the prices of inputs and sales lifted further in January, increasing these indices by six and five index points respectively. 

“Although the fuel price declined significantly, it looks as if businesses are finding it difficult to make up for the high cost pressures experienced over a wide front in 2014.

“The inability of South Africa to remain competitive in the global markets and the lagged effect of cost increases owing to the weakening rand and labour costs earlier in 2014 are still having a lagged effect on prices before the lower fuel price will find its way to the shelves,” the chamber noted.

Expectations for both sales and input prices increased in January, with these indices increasing by five index points and one index point respectively.

Losses owing to load shedding and lower output would add to input costs, with Sacci adding that the Trade Expectations Index (TEI) remained sensitive to the possibility of future electricity shortages. 

“The TEI slowed by three index points, which happens very rarely, as expectations usually exceed current trade conditions,” it stated.

Employment conditions in the trade environment improved by 11 index points to 57 in January, which the chamber described as “erratic and surprising”, given recent trends. 

Six-month prospects for employment remained positive, with the expectations index increasing by five to 58 points in January .