Trade activity weakens in April, businesses under pressure – Sacci

Trade conditions weakened in April, with the South African Chamber of Commerce and Industry (Sacci) Trade Conditions Survey’s Trade Activity Index (TAI) measuring 39, down from 43 in March.

The prevailing tight trade conditions are reflected in lower sales volumes, weak new orders and declining supplier deliveries.

“The current trade conditions are more restrained than in April 2017, with the TAI measuring six index points lower in April than a year ago.

“Trade expectations are better than a year ago, with the Trade Expectations Index at 54 points, which is two index points above the April 2017 level,” Sacci pointed out.

Respondents to the survey indicated that the fuel price increase affected turnover and put profit margins under pressure. Bigger clients are also lengthening the credit cycle, thereby influencing cash flow.

“Many businesses have become dependent on exports, owing to the regulatory environment in South Africa often being difficult, but with the stronger rand reducing rand income.

“The requirements to adhere to ownership prescriptions in South Africa are having negative effects on manufacturing businesses. The increase in value-added tax to 15%, the higher fuel levy, strikes and looting and property damage at certain locations, had a negative effect on trade activity,” Sacci stated.

Moreover, Sacci reported that sales volumes slipped in April, with the subindex 11 points lower at 35, down from 46 in March, but with the new orders index only slightly down by one point to 34.

Expected sales volumes and expected new orders were both higher at 61 and 54 points, respectively.

Sacci said inventories are anticipated to decline to 48 from 53 points over the next six months.

The employment subindex improved by one point to 43 in April, while the six months’ employment outlook index increased by six index points to 52 in April. The employment subindices, however, remain erratic, said Sacci.