Trade expectations improve – Sacci

Amid an improving business mood, the South African Chamber of Commerce and Industry’s (Sacci’s) latest Trade Conditions Survey for December saw the Trade Expectations Index (TEI) for the next six months retaining a level well into positive territory, at 60 index points.

This is one point higher than in November.

However, trade conditions in December were restrained owing to seasonal factors, Sacci said in a statement on Wednesday.

The seasonally adjusted Trade Activity Index (TAI) rose from 41 in November to 48 in December.

Compared with December 2016, the TAI was three index points lower, while the TEI was two points higher.

“Apart from the tougher prevailing trade conditions since September, reflecting the sluggish economy, the slower pace of household, government and capital spending is also the result of tight financial conditions and high debt levels,” Sacci said.

Respondents to the survey mentioned skills shortages, mentoring, fuel price hikes, access to and cost of funding, uncertainty of jobs, regulatory uncertainty in some sectors and political instability as constraining factors for trade.   

“The significantly stronger but unstable rand against currencies of major trading partners, high real interest rates and high unemployment have had a dilatory effect on trade. It is expected that, given the present uncertainty of political and economic direction, nominal interest rates will remain unchanged despite lower inflation.”

Sacci pointed out that the upcoming national budget in February would also set the scene for trade conditions going forward, coupled with rising expectations which, in turn, moderates the business mood.