SACCI: trade conditions in negative territory

By Janice Roberts

Hand and money staircase isolated on white

SACCI’s Trade Conditions Survey for March 2016 shows trade conditions in negative territory for the 5th consecutive month.

The seasonally adjusted composite Trade Activity Index (TAI) for March 2016 stood at 45 that improved from February’s TAI of 41. The TAI was lower than the 47 of March 2015. Respondents listed the drought, rising prices, the uncertain political situation, shrinking trade margins and seasonal factors as impeding business.

The non-seasonally adjusted TAI increased from 44 to 48 with the sales volumes sub-index remaining at 51 in March 2016 while the new orders index increased from 42 to 49. Supplier deliveries increased with the sub-index improving to 44 from 37 in February 2016. Inventories, however, declined somewhat.

There was a notable increase in price sub-indices with the sales price sub-index increasing by 9 points to 68 after only a one point increase in February 2016. The input cost sub-index also rose by 9 points to a high level of 84 in March 2016. The input cost and the sales price indices were respectively 6 and 14 points higher than in March 2015. Although sales price inflationary expectations eased somewhat by 2 index points to 73 index points, the input cost expectations index rose by 2 points to 81 in March.

Trade expectations remain negative and imply tight conditions to at least continue over the next six months. The seasonally adjusted Trade Expectations Index (TEI) stood at 45 in March 2016 after measuring 44 in February. Although sales, new orders and supplier deliveries improved, they remained in negative territory. Expected stock holdings declined slightly. The possibility of further increases in interest rates, uncertainty on the volatile rand exchange rate and the sluggish domestic and world economy are weighing on trade volumes.

Although the employment situation in the trade sector improved notably in March 2016 to 48, the prospects for employment in the sector declined as the sub-index declined to 40 from 47 in February 2016.

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