Trade conditions remain weak
SACCI’s February 2019 trade conditions survey reflected an improvement on January 2019 trading conditions although conditions remained weak. The Trade Activity Index (TAI) for February 2019 measured 35 compared to 30 in January 2019. The seasonally adjusted Trade Activity Index (TAI) improved to 34 – gaining 4 index points, therefore 66% of respondents still experience tight trade conditions in February. The February 2019 TAI was 9 points lower than the February 2018 TAI.
Trade conditions are expected to remain tough over the next few months. The Trade Expectations Index (TEI) for February 2019 at 41 is down by 1 index point from the January 2019 level and well into negative terrain. The TEI is currently 18 points below last year’s February level of 59, which at the time reflected high expectations for trade activity.
Although slightly higher economic growth is expected for 2019, the upcoming elections in May 2019 may add some uncertainty to expectations. Domestic economic conditions are not favourable, and lower global economic growth and global trade difficulties exacerbate already tight trade conditions. Locally, high unemployment, high household debt, increasing risks and cost of energy supply, strikes and work stoppages, and the application of empowerment measures, are among the challenges facing trade.
The sales sub-index remained unchanged at the low level of 35 in February 2019 while the new orders sub-index improved by 4 points to 36. Sales expectations improved marginally in February with the sub-index increasing by one index point to 47. The new orders sub-index on expectations also improved slightly by 2 index points to 44. It appears that respondents experienced difficulties with supplier deliveries in January and February 2019 as the sub-index declined from 42 in December 2018 to 23 and 26 respectively in January and February 2019.
Despite bleak trade conditions, the sales price index rose by 9 index points to 56 with the increase explained by higher price in an effort to remain
profitable. Input costs also increased with the sub-index on input prices rising by 9 points to 66 in February 2019. Sales and input prices are
expected to rise by 5 and 3 index points respectively over the next six months – implying continued inflationary pressures in the trade environment. A weaker rand and higher fuel and energy prices could negatively impact inflationary prospects.
The employment sub-index recovered from a 15 points decline in January 2019 as the sub-index recorded 35 in February 2019, still reflecting negative employment sentiment. The six-month employment outlook deteriorated further in February with the sub-index declining by 5 points to 33 compared to a decline of 3 index points in January 2019.
Released by the South African Chamber of Commerce and Industry at their offices in Illovo, Johannesburg.
For more information and infographic, see the SACCI website – www.sacci.org.za or contact:
SACCI CEO Cell: 082 551 1159
Economist for SACCI Cell: 082 822 5566
Read or download the Trade Activity Index below: