Optimism for better trade conditions in next six months

Trade conditions in South Africa remained weak and fragile in November and December, though there was a slight improvement in the trading climate.

However, business seems to be quite optimistic for better conditions in the next six months.

The SA Chamber of Commerce and Industry’s (Sacci) December 2023 survey on trade conditions indicated a slight improvement in the trading climate, although respondents generally still perceive the conditions as fragile.

In December, 38% of respondents expressed positivity about the conditions, and 43% anticipated improvements in the next six months.

However, seasonally adjusted expectations declined slightly from 51% in October to 50% in December – while 64% of respondents viewed trade conditions in December 2023 as worse than the trading conditions in December 2022.

In December 2023, 67% of respondents reported lower sales volumes, while 37% experienced increased new orders.

Sacci says though input cost increases seemed to ease, poor demand restrained the rise in sale prices.

In addition, expectations were negatively influenced by constrained holiday spending, particularly in households under financial pressure. However, despite the prevailing weak trade conditions, seasonally adjusted expectations for the next six months verge on a positive scenario. Although the ongoing decline in new vehicle sales serves as a leading indicator – signalling potential challenges for the economy and retail trade volumes are also showing a negative trend– foreign trade and inbound tourism positively impacted trade in the short and medium term, according to Sacci.

Not even the Black Friday in November significantly boosted trade, with more concern centred around rand volatility and exchange rate fluctuations.

Although input cost increases have moderated, some respondents still face price hikes of up to 12%, while electricity supply remains a hindrance to trade, even though businesses have explored alternative supply routes.

Sacci notes that seasonal patterns play a notable role in November/December trade conditions and stifled economic prospects, along with current political manoeuvring that contributed to respondent’s uncertainty.

The weak trade conditions also affected employment opportunities but seasonal employment led to businesses hiring temporary staff in December, increasing the employment index from 34% of respondents in October to 40% hiring new staff in December.

Looking ahead, 43% of respondents are considering hiring additional staff in the next six months.

43% of respondents consider hiring more staff in next six months