Sacci’s TAI tracks deep into negative zone

THE MONTHLY SA Chamber of Commerce and Industry’s (Sacci) Trade Activity index (TAI) last month tracked further into negative space.

In a statement issued yesterday, the chamber said the index registered 44 last month while the seasonally adjusted TAI measured 47 – down from 51 in June.

This comes on the back of the July Business Confidence index (BCI), released last week, which showed that business was slightly more confident ahead of the municipal elections. Sacci’s BCI improved to 96 points compared with 95.1 in June. However, year on year, it was 5.8 index points lower.

Sacci said the seasonally adjusted TAI was 1 point lower last month than the 48 in July last year.

Sacci’s index noted the new orders sub-index slowed by five points to 44 in July from 49 in June, while the sales volumes sub-index also fell by five points to 46.

The inventories index decreased by four points to 45 and supplier deliveries deteriorated by 11 points to 36. The low backlog on orders declined by five index points to 33 and reflected on the ongoing uncertainty in trade conditions, it said.

Price pressures eased further as the sub-indices of both sales prices and input price indices continued to decline last month.

The sales price index declined by five points to 54, while the input price index fell by 13 points to 56 from 69 in June.

Price rise expectations also eased further as the sales price index declined by eight points to 60 and expectations on input prices dropped as the index fell substantially from 78 to 64.

Stable interest rates, the stronger and less volatile rand and a decline in the fuel price gave scope for lower inflationary expectations.

However, increasing energy costs, and higher wage and salary demands could be expected to put pressure on profit margins, lead to strain on job creation, and further constrain an already struggling trade sector, it said.

Despite the negativity, trade expectations remained in positive terrain, but declined both seasonally adjusted and non-seasonally adjusted. The Trade Expectations index declined to 52 in July from 54 in June while expectations for sales volumes declined slightly.

Expected new orders were more negative as the sub-index declined by five points. Inventory levels remained static, but expected supply delivery declined.

The Reserve Bank’s latest prediction for zero economic growth this year implies that tight trade prospects will prevail for the rest of the year.