The seasonally adjusted composite Trade Activity Index (TAI) from the South African Chamber of Commerce and Industry (SACCI) increased slightly by two index points to 52 in June 2014 after declining by one point to 50 in May 2014.
Although overall trade conditions remained weak, the TAI hovered around positive territory since February 2014. With the economy performing at low levels, domestic and international trade still reflect reasonable performance but with slightly lower sales volumes than in 2013. The TAI is a notable five index points lower than in June 2013.
The sales volumes sub-index remained on 52 in June while the new orders sub-index declined marginally to 48 – confirming weaker but stable prospects. Supplier deliveries appear to be under slight pressure as the sub-index on deliveries decreased by four points to 54. Inventories remained virtually unchanged month-on-month at 53 although lower than the 57 of last year.
Price pressures remained contained as the selling and input price sub-indices increased by one and decreased by two index points respectively. However, 64% and 70% of the respondents are still experiencing rising prices on sales and inputs, respectively. Real financing costs declined as inflation increased by about half a percentage point while nominal interest rates remained unchanged.
It appears that local traders are now finding it easier to push through price increases as the higher prices of imported goods and services provide the room to do so. The rand exchange rate weakened by 2,5% between June and May 2014 as the rand came under renewed pressure. Expected prices for both sales and inputs are to increase over the next six months although by less than expected in January.
The seasonally adjusted trade expectations index (TEI) decreased by four points to 55 from 59 in May 2014. Expectations for the sales volume component of trade activity also declined by a substantial margin of five index points to 56 in June 2014.
Current employment conditions remained stable at 48 but were still in negative territory in June 2014. The prospects for employment in the trade sector improved slightly to 49 following the earlier increase by two index points in May 2014.