Trading forecast for early 2013 looks bleak

2012-11-15 00:00

THE expectations of wholesalers and retailers regarding the next six months of trading declined further in October 2012, suggesting that the first few months of 2013 will be tough in the trade environment.

Bleak short-term outlook

The latest South African Chamber of Commerce and Industry (Sacci) Trade Activity Index (TAI) for October 2012 improved marginally on a seasonally-adjusted basis to 50 points from 46 in September 2012. However, the Trade Expectations Index (TEI) slumped to 53 points from 55 points in the previous month.

The Trade Conditions Survey is a key indicator of the state of the wholesale and retail environments.

Stable festive season predicted

Sacci CEO Neren Rau told The Witness yesterday that the survey suggests that on the whole, businesses will experience an “average” festive season, with sales coming in at a similar level to that of last year.

“There has been a buildup to the festive season. The main activity indicators are up. Employment is, however, down.

“This is a sensitive environment … and businesses have shown some reluctance to employ people.

“However, we do believe that employment will rise during the festive season, especially with retailers employing more people for temporary needs. This process has been delayed up to now.

“Having said this, the ramp-up to the festive season has not been buoyant. We expect it to be similar to last year,” Rau said.

Cautious about the future

He warned that there was much uncertainty regarding the trading performance in the first few months of 2013.

“The trade expectations index (TEI) is getting dangerously close to the TAI. This is an unusual event.

“We are worried that the TEI is almost at a tipping point … and it is a concern for 2013.

“It could be that business’ expectations are aligning with reality … but the worrying thing is that this reality is not very good.

“There appears to be reduced optimism in the future.”

He added that many businesses have not maintained high stock levels as they do not expect sales to be exceptionally robust.

Confidence took a knock

He said that although the TAI and TEI remained relatively weak, they had performed better than the Sacci business confidence index (BCI).

Sacci’s latest BCI for October 2012 came in at 92 points, compared with 91,7 in September 2012 and 97,5 in October last year.

“The concern for us comes in with regard to the outlook for 2013.”

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