Further Deterioration of Trade Conditions
Trade conditions deteriorated further in January 2014 according to the monthly SACCI Trade Conditions Survey.
The seasonally adjusted Trade Activity Index (TAI) tapered by one index point to 47, indicating that the pace of trade activity has slowed further. Although tight household financial circumstances contributed substantially to the deterioration, slow domestic economic growth and rising costs place an additional damper on business trade. The recent interest rate hike is a case in point, impacting both the consumer and business. The seasonally adjusted TAI for January 2014 was below the January 2012 (50) and January 2013 (54) levels.
Sales volumes declined to 44 from 45 in December 2013 while new orders increased from 42 to 47 in January 2014. This bodes well for expected improvements in sales in the coming months. Inventories also improved slightly following a substantial reduction in inventory levels in December 2013. Supplier deliveries remained in negative territory at 45 with backlogs comfortably accommodated given the subdued trade conditions.
Sales and input price pressures rose sharply in January 2014 with the sales price index escalating by 7 index points to 70 and the input price index also climbing by 7 points to 78. The weaker rand is fuelling inflationary expectations via the higher rand prices of final imported consumption, investment and intermediary goods and services. The price expectations indices on sales and inputs remained at high levels of 80 and 85 respectively in January 2014, after it surged by 8 and 7 points to respectively in December 2013.
The seasonally adjusted trade expectations index (TEI) declined to 58 after remaining unchanged and in positive territory at 61 in December 2013. The six month outlook for sales volumes also slowed (-3 index points); new orders were further up by 2 points to 67, and the supplier deliveries index increased by 2 points to 56. The inventories outlook withdrew to 52 confirming that the path to improvement in trade expectations will occasionally be restrained.
Current employment conditions in the trade sector dipped further into negative territory to 45 in January 2014. The employment prospects index was also pressured and contracted by 3 points to 52 in January 2014.
Released by the South African Chamber of Commerce and Industry at the SACCI offices in Rosebank, Johannesburg
For more information, see the SACCI website, www.sacci.org.za or contact:
Economist for SACCI
Cell: 082 822 5566
Phone: 011 446 3800