Wednesday, 18 September 2019
Slightly Improved Trade Expectations
Trade conditions improved marginally in August 2019 although conditions remained tough. Expectations for the next six months suggest further improvement of present trade conditions. The Trade Activity Index (TAI) increased by 2 index points from 40 to 42 and the Trade Expectations Index (TEI) improved by 4 index points to 46 in August 2019.
The seasonally adjusted Trade Activity Index (TAI) improved by 1 index point from 42 to 43 – about a similar level as in August 2018. The seasonally adjusted Trade Expectations Index (TEI) which improved from 42 to 45 in August 2019 was 3 index points better than in August 2018. Respondents expect all trade activity components in the next six months to improve except for sales prices.
Higher sales and input prices in August 2019 were a result of the tough trade conditions, which exerted more pressure on businesses to remain profitable. The slightly lower input prices (costs) continue to put pressure on profitability. Reduced trade activity caused the backlog on orders to decline notably although stock levels rose as supplier deliveries increased in August 2019.
Apart from trade activity components, respondents mentioned that clients either are not honouring payments or pay late. The weak rand negatively influenced some high import propensity sectors while benefiting some exporters. The notable higher tariffs on water and electricity continue to negatively impact trade costs.
The employment sub index increased from 40 to 44 index points in August 2019. Expected employment conditions improved as the sub-index on employment expectations rose to 43 from 36 in July 2019.
Released by the South African Chamber of Commerce and Industry at their offices in Illovo, Johannesburg.