Business
Majority of businesses still view trade conditions as negative
The lack of economic growth is evident in the latest trade conditions survey and participants also do not have much hope for the future.
The majority of businesses who participated in the South African Chamber of Commerce and Industry (SACCI)’s trade conditions survey said they still experience trade conditions in South Africa as negative, reflecting a tough start to 2024.
The SACCI says the results from the February 2024 Survey of Trade Conditions confirm a rough trade environment that began to deteriorate in October 2023.
The trade activity index only scored 28 index points in January, the worst level since April 2020 after the Covid State of Disaster was announced in March 2020. Although there was a minor improvement to 31 index points between January and February, 69% of the participants in general still experienced February’s trade conditions as negative.
In addition, 79% of the participants said February’s trade conditions were worse than a year ago. Participants’ expectations for the next six months lifted somewhat from 42 index points to 43, but only 43% had positive expectations about future conditions. Seasonal factors did not play a significant role in the deterioration of trade conditions.
The index shows that all elements of trade improved in February although it was from the historic low base of January 2024. In January, 26% of the participants experienced higher sale volumes, which improved to a meagre 34% citing increased sale volumes in February 2024. New orders also showed a slight improvement in February to 25 from 18 in January 2024.
SRD grant increases to R370 on 1 April by a meagre R20
ALSO READ: Trade conditions remain weak and fragile – SACCI
Input costs and sales piece increases down
Input cost slowed further from 66 index points in January to 56 in February, with only 56% of participants recording rising input costs in February. This led to a significant easing in sales price increases, as only 38% of respondents recorded sales price increases.
This also implies a notable drop in inflationary expectations, as input costs as well as sales prices might decline further over the next six months as the South African Reserve Bank may possibly consider easing its monetary stance on interest rates.
The real output of the wholesale and retail trade, as well as the hotel and restaurant sector decreased by 1.7% compared to a year ago, after growing by 3.5% compared to 2022.
The index also indicates that a number of trade activities were touched by the cumbersome trade conditions. Logistical problems at harbours and rail transport have limited global merchandise trade, especially low-value-high-volume exports which contributed to the more difficult trade conditions.
Tourist services are still in the recovery phase, while new vehicle sales were lower, although they appear to have stabilised.
SACCI says with households struggling to make ends meet, retail trade volumes were lower in December 2023 but benefited from Black Friday in November 2023.
“Lower interest rates could help to stabilise retail trade activity and enhance household spending. However, electricity supply continues to affect trade conditions, notably the additional cost to provide other sources of energy and stock losses of perishable goods.”
The considerable rough trade conditions have affected employment relatively less according to the index. In January 2024, 34% of respondents were still hiring staff, which increased to 38% in February 2024. However, the prospects for additional employment in the trade sector in the next six months remain limited.
