Trade conditions in South Africa weakened in September, with the South African Chamber of Commerce and Industry’s (Sacci’s) seasonally adjusted Trade Activity Index (TAI) falling to 46, following a five-point recovery to 50 in August.
The latest TAI was much the same as in September 2011, when it was also in negative territory below the 50-index level at 47.
Sacci stated that trade conditions in the country had been challenging since April and that it appeared to be settling in negative territory, as all the subcomponents of trade activity were less than 50 in September.
Sales and new orders were in negative territory for the last three months and registered 47 and 46, respectively, in September. The inventories and the supplier deliveries indices remained almost unchanged at 47 and 49 respectively.
Sales and input prices continued to be stable between August and September. Cost pressures from administered price increases were substantially greater than that of producer inflation, while weaker trade conditions made it difficult to absorb rising costs.
The chamber noted that if the increase in certain labour costs, which exceeded 12% year-on-year, and the weakening of the rand, which fell about 18% in the last 30 days, were sustained, it could have adverse consequences for inflation and trade conditions.
Meanwhile, the six-month trade expectations index (TEI) remained at a level of about 55 for the last three months after measuring more than 60 up to June.
“The uncertain conditions in the South African economy since the middle of August will affect the outlook for trade conditions in the next six months with the TEI possibly ending the year in negative territory,” Sacci warned.
The six-month outlook for the key components of trade activity confirmed the tentative nature of current trade conditions.
The sales and new-order expectations indices remained at similar levels in September compared with August.
Higher inventory holdings of 45 compared with 41 in August was partly driven by strike action in the transport industry.
Newswire Reuters reported on Wednesday that two transport unions with 5 500 members agreed to abandon the two-week-long truckers' strike. However, the South African Transport and Allied Workers Union, which represented about 28 000 workers, continued its boycott.
Another transport union, which represented 9 500 workers denied reports that its members would also suspend strike action, as negotiatons continued.
Last week, unions rejected employers’ 18% pay rise offer over two years, as truck drivers demanded a yearly wage increase of 12% for two years.
Meanwhile, the supplier deliveries index was not expected to be negatively affected, as it remained at 51.
Employment conditions in the trade environment also remained in negative territory, with the employment index standing at 48. Employment prospects in September did not change materially with the index registering at 49, despite higher labour costs.
