Trade outlook remains bleak – Sacci

JOHANNESBURG - The Trade Activity Index (TAI), which measures current trade activity and was released by the South African Chamber of Commerce and Industry (Sacci) on Tuesday, improved marginally in April but the outlook remained subdued as Sacci described trade conditions in the medium term as “middle of the road“.

The seasonally adjusted TAI rose by 4 index points to 51 in April, breaching through the critical breakeven barrier of 50.

At the same time, the seasonally adjusted Trade Expectations Index (TEI), which measures trade conditions six months ahead, rose two points to 54 in March, again suggesting tepid growth in both domestic and foreign trade in the months ahead.

Most worrisome in both indices was the bleak employment prospects they presented as the employment sub indices declined by 3 points to 47 in the TAI and by 1 point to 45 in the TEI.

On current trade conditions, the sales volume sub index dropped by 4 points to 51 in April while new orders sub index dropped by 5 points to 50.

Foreign trade appeared to be propping up economic activity as both import and export volumes increased, with exports boosted in part by exports of new vehicles as car sales figures have shown over the first quarter of 2015.

Sacci said domestic demand remained under pressure given high household debt and government’s public spending restraint.

Supplier deliveries had improved while the inventory index rose by 7 index points to 54, suggesting companies, specifically manufacturers, were building up inventories.

If conditions deteriorated and these remained unsold, it would mean manufactures having to cut prices during the second half of the year.

The sales price index was unchanged in April, while input price index fell by a point to 69.

Sacci said the rising price of crude oil was a concern as it added to rising electricity prices, which were expected to rise further this month. The weakening rand was also worrisome, given South Africa’s high propensity to import.

Price expectations were also on the rise, as both the sales price and input prices index in the expectations index recorded an increase.

African News Agency

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