A majority of South African businesses have remained optimistic about improvement in trade activity in the next six months, in spite of experiencing negative trade conditions in August
The South African Chamber of Commerce and Industry (Sacci) yesterday said that its August 2023 survey of the trade environment still showed that trade conditions remain “tight and unsteady”.
The composite Trade Activity Index of the survey represents the up-to-date performance of a number of trade elements, while the Trade Expectations Index measures expectations on trade elements in six months’ time.
Sacci’s Richard Downing said the present trade milieu remained difficult with 57% of the respondents experiencing negative trade conditions.
Trade conditions for businesses in August weakened as Eskom implemented heightened levels of power cuts up to Stage 6 load shedding, ending months of reprieve of lower levels of load shedding.
The logistics sector in August was still recovering from the burning of trucks on the highway in coordinated attacks that crippled the movement of goods in July.
However, Downing said that despite negative existing considerations, 56% of respondents are nonetheless still positive about trade conditions six months from now, that is at about the beginning of 2024.
“Except for a slight easing in input costs, all the other trade elements deteriorated between July and August 2024. Input costs, however, remain high, with 78% of respondents experiencing rising input costs in August 2023,” Downing said.
“With only 58% of respondents reporting rising sales prices, inflationary pressures might ease further. Sales volumes and employment weakened the most of all the trade elements.”
Sacci said conditions in the wholesale and retail trade; hotels and restaurants sector contracted by 1.2% year-on-year in the 1st half of 2023, thus confirming a constrained trade sector.
However, it said that regardless of the current inhibited trade conditions, the positive expectations for the next six months support a positive outlook on trade.
Recently released data show that retail trade volumes remain under pressure at -1% year-on-year, while import volumes rose to 8.3% and export volumes were at 3.7%, and new vehicle sales are experiencing year-on-year improvements of 4.5% in the first half of 2023.
The number of visiting tourists also increased by about 30%, but the number was still 35% below pre-Covid levels of February 2020.
Electricity and water supply output, however, declined by 6.5% year-on-year in the first half of 2023, weighing on trade activity and input costs.
Increasing debt servicing costs owing to higher debt levels and higher interest rates are also adversely affecting longer-term investment decisions and resources.
“The unsteady trade environment affects employment in this sector negatively, thus contributing to the decline of appointments between July and August 2023,” Downing said.
“The expected rise in appointments in the next six months still reflects a positive assessment of labour in the trade environment.”
BUSINESS REPORT