According to SACCI’s June 2018 trade conditions survey, trade conditions deteriorated further. The Trade Activity Index (TAI) that measures present trade conditions, moved further into negative territory and was 37, compared to 40 in May 2018. The survey also shows trade expectations for the next six months, as reflected by the Trade Expectations Index (TEI), which moved to negative territory by declining from 51 in May, to 49 in June 2018.

The current weak trade conditions are marked by 71% of respondents experiencing decreased sales volumes, and 68% of respondents subject to decreased new orders. Compared to June 2017, trade conditions were more restrained in June 2018, with the TAI 11 index points lower than last year. The trade expectations index, at 49 in June, moved into negative territory for the first time in 2018 and was at about the same level of a year ago.

Respondents were disquieted about the depressed economy, political uncertainty, the weak rand exchange rate, and the continued increase in fuel prices. Late deliveries and complementary businesses closing down, or shrinking their activities, disrupt trade conditions.
According to the survey, sales volumes are under severe pressure with the sub-index, 7-index points less than the 36 measured in May 2018. New orders follow suit with the sub-index down by 4 points to 32. The expected sales volumes index, although positive at 53, was at its lowest level in 2018. The expected new orders index was also lower at 50 – declining from 52 in May. Subdued trade activity and decreased sales will cause slower turnaround and reduced inventory holdings.

The subdued trade conditions are accompanied by rising sales prices, with 57% of respondents indicating rising sales prices, and the sub-index remaining virtually unchanged in June 2018. The input price index rose by 3-index points to 68. Price expectations also point to sticky higher prices, even with 75% of respondents experiencing higher input costs.  

The employment sub-index stayed in negative terrain at 45, compared to 44 in May 2018. The 6-month employment outlook index declined by 2-index points to 43 – implying rigid employment conditions in the trade environment.

 

Issued by SACCI