Trade conditions improve to best level in 2024 on load shedding suspension
TRADE conditions in South Africa are expected to improve in the next six months after reaching this year’s best level during April on the back of load shedding being suspended the whole month, though the high rate of crime is still a major concern.
The SA Chamber of Commerce and Industry (Sacci) yesterday said the Trade Activity Index (TAI) recovered to reach the best level thus far in 2024, although it went through a tough period at the start of the year.
Sacci said that after only 28% of the respondents were positive about conditions in January 2024, the TAI gradually improved to measure 45 in April – or 45% of respondents being optimistic about trade.
Sacci economist Richard Downing said though conditions were still in negative territory, below the 50-mark, they were at the best level since the middle of 2023. “The outlook for the next six months also turned positive as 53% of the respondents expect conditions to improve,” Downing said.
“Seasonal factors played a marginal negative role in trade conditions although there was more trading day regression in April 2024 than in April 2023,” Downing said.
“Major trade elements, like sales and new orders, improved notably in March and April while supplier deliveries and increased inventories also reflected better overall trade activities. About 44% of respondents experienced higher sales volumes and increased new orders in April 2024.”
On the negative side, Sacci said input costs were higher, leading to a slight increase in sales prices with half of the respondents reporting higher sales prices.
The higher input costs could, however, again kindle inflationary expectations, and the SA Reserve Bank may therefore prolong an easier monetary stance and lower interest rates.
According to Downing, various trade activities were affected differently. He said the legacy of logistical problems at harbours and rail transport had notably impacted merchandise global trade, especially low-value-highvolume exports.
“Merchandise import and export volumes lately declined year-on-year and month-on-month. Tourist from
overseas are still increasing while new vehicle sales although lower, appear to have stabilized,” Downing said.
“Retail trade volumes continued to remain under pressure as the real disposable income of household suffer under debt servicing costs and lower salary and wage adjustments.
“Relative higher rates of increase of non-durable goods like food have lowered the discretionary spending by households on durable and semidurable goods.
“Although electricity supply was more stable in April and which eased
trade conditions, the relative higher cost of electricity made trade less lucrative. The high crime rate is adversely affecting the restaurant and catering business – especially during night time.”
Sacci said the challenging trade conditions had relatively affected employment less as 47% of respondents increased their staff component in April.
The prospects for additional employment in the next six months, however, declined slightly with 41% of respondents anticipating hiring staff.