Sacci index shows trade looks bleak

Trade took a beating in May, providing further evidence of the effects of surging global inflation, the war in Ukraine, supply chain issues, higher fuel and energy prices, rising interest rates and lockdowns in China.

Trade took a beating in May, providing further evidence of the effects of surging global inflation, the Ukraine war, supply chain issues, higher fuel and energy prices, rising interest rates and Covid-19 lockdowns in China.

Locally, the situation is made worse by power cuts and logistical constraints as a result of theft and vandalism at railways and ports, according to the Trade Conditions Survey for May, compiled by the SA Chamber of Commerce and Industry (Sacci).

More than 80% of respondents said they expected their input costs to rise as a result.

The survey includes the trade activity index (TAI) and the trade expectations index (TEI), both a on scale of 0 to 100 where a reading above or below 50 is positive or negative.

TAI which measures sales volumes, new orders, supplier deliveries, inventory levels and employment rose by one point to 38, though sales volumes, input prices and new orders fell.

TEI which assesses respondents’ expectations of sales volumes, new orders, supplier deliveries, inventory levels and employment levels in the coming six months fell by 12 points to 47 from April to May. That means fewer respondents expect trade conditions to improve six months from now, largely because of falling sales volumes and fewer new orders.

Respondents expect sales prices to rise at a slower pace due to uncertain demand and slowing economic conditions.

Job opportunities remain tight in the trade sector, with just less than four in 10 (38%) of respondents saying they hired new employees while “expectations on job opportunities were unchanged for the next six months”, said Sacci.

Activity in the wholesale and retail trade, and hotels and restaurants jumped 6% in 2021 after dropping 12.4% in 2020.

But that is still 0.4% lower than the first quarter of 2020 shortly before the government implemented strict Covid-19 lockdown measures.