Trade Conditions Remain Tight
Trade conditions remained in negative territory in December 2019, but the seasonally adjusted Trade Activity Index (TAI) improved marginally to 44 – up by one index point and still below the 50-index level of unchanged conditions. Expectations for the next six months look better than the December trade conditions with the seasonally adjusted Trade Expectations Index (TEI) staying on 46, which are two index points above the TAI. Trade conditions were on the same level as in December 2018. Compared to the first nine months of 2018, the wholesale and retail trade; hotels and restaurants sector virtually remained stagnant in the first three quarters of 2019 – growing by only 0.1%.
All components of trade activity declined in December 2019 and this is partly ascribable to seasonal factors due to business-to-business trade usually receding during the holiday period. Input costs and sales prices were lower during December but are expected to increase over the next six months. Input costs are expected to rise as the sub-index increased by not less than 10 points to 86 in December 2019. There appears to be a negative shift in retail spending away from December to November given the increased Black Friday sales in November.
In general, respondents mentioned that inferior look-alike products sell at discounted prices offered by competitors that do not comply with regulatory standards, thereby creating unfair trade practices. Tax and tariff burdens weighed heavily as service provided by local governments fell short. Erratic energy supply due to load shedding, cable theft, and the costs of fuel and alternative energy supply, affected the viability of traders surveyed. 2020 is approached with scepticism due to changing seasonal factors, low economic growth and uncertain domestic and global political sentiment.
The employment sub index improved to 45 in December 2019 from 40 in November due to the hiring of temporary personnel. Employment prospects will continue to be under pressure and in negative territory over the next six months with the sub-index on employment expectations remaining on 38 in December 2019.
Released by the South African Chamber of Commerce and Industry at their offices in Illovo, Johannesburg.
For more information:
SACCI CEO Cell: 082 551 1159
Economist for SACCI Cell: 082 822 5566
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