SACCI Media Release
July 2020 Trade Conditions Survey
Recovering from Distorted Trade Conditions
The continuing lockdown since March 2020 owing to Covid-19 deepened the recessionary economic conditions and further distorted trade conditions. The selected restrictive approach towards certain types of trade, especially during the hard lockdown period, had a serious effect on trade. The seasonally adjusted Trade Activity Index (TAI) accordingly declined by 11 index points to 26 in April but since then gradually increased to 37 in July 2020.
Expected trade conditions consequently also deteriorated strongly in April with 70% of respondents having a negative outlook. Respondents remained sceptical in July with 62% maintaining a negative view about trade conditions for the rest of 2020. Compared to last year July, the TAI was 3 index points lower than in July 2019 while the six month expectations index (TEI) was 4 points lower than a year ago.
Sales volumes and new orders improved from highly depressed levels in April, but remained around pre-lockdown recessionary levels. The interference in consumer choice for certain goods and services not only distorted prices, but also had multiplying effects beyond the trade environment of such goods and services. Employment in the affected sectors hence declined. Supplier deliveries and inventories were still below pre-lockdown levels in July.
Trade expectations for the next six months recovered somewhat but imply a slow recovery over the next six months if the lockdown level is reduced. Both sales and new orders are expected to recover but remain sluggish towards year-end with the indices well below 50. Supplier deliveries and inventories are seen to muddle through over the next six months. Both sales and input prices are expected to be facing upward pressure over the next six months as inflationary consequences remerge.
After the employment sub-index slipped to 27 in May and June, it improved slightly to 33 in July. Expectations for jobs in the trade sector towards year-end improved with 34% of respondents hiring staff in July compared to 25% in June. Jobs in the trade sector however remain at risk over the next six months.
Released by the South African Chamber of Commerce and Industry at their offices in Illovo, Johannesburg.
Alan Mukoki SACCI CEO Cell:082 551 1159
Richard Downing Economist for SACCI Cell: 082 822 5566