The South African Chamber of Commerce and Industry’s (Sacci’s) Trade Conditions Survey for August shows that trade conditions improved marginally in July and August and appear to have stabilised, although it remains in negative terrain.

The effect of the war in the Middle East on fuel prices in April had a disrupting impact on trade conditions. Trade conditions appear to be recovering slowly, with the index, after reaching a low of 35 in June, having recovered somewhat to 42 in August.

Supplier deliveries and inventories improved while sales prices and input costs were virtually unchanged. New orders and sales volumes improved slightly.

The July and August surveys indicate that inflationary pressures may have eased, Sacci says.

The 23% increase in the crude oil price from about $73/bl at the end of June to $90/bl at the end of August, could lead to further cautious trade conditions and affect spending patterns. Input costs and profitability of business may be adversely impacted, Sacci notes.

Further, expected trade conditions continued their upward trend and recorded a positive trajectory for the coming six months, the August survey shows.

However, the divergence between present and expected trade conditions remains. The more stable fuel price and lower inflation played a role in the positive expectations. It is imperative that real economic performance supports the expected improved trade conditions, Sacci states.

Despite the present stable but tough trade conditions, 33% of respondents employed more staff in August.

Given expected improved trade conditions in the next six months, respondents intend to further increase employment with the index increasing to 64 in August from 40 in April, which coincided with the peak of high crude oil prices.

Trade conditions were also reflected in recently released official data, including consumer inflation slowing to 4.3% and producer inflation to 3.1% in July.

Additionally, private banking credit to households rose by 5% year-on-year and to non-households by about 9% year-on-year in July; retail trade volumes remained restrained, rising by only 1.6% year-on-year; and merchandise export volumes dipped in the short term.