Trade expected to slow in new year

2012-12-12 00:00

AN increase in trade activity in November 2012 was merely a festive season-induced high that will be followed by subdued activity in the wholesale and retail trade sectors heading into the new year.

This is clear in the latest trade conditions survey released by the South African Chamber of Commerce and Industry (Sacci) yesterday.

While the Trade Activity Index (TAI) rose to 53 points on a seasonally-adjusted basis in November 2012 from 50 in October 2012 and 49 in November 2011, the Trade Expectations Index (TEI) plummeted to 51 points last month.

The TEI — which measures business’ expectations for the next six months — came in at 61 points in June 2012 and has seen a steady deterioration since then.

Sacci CEO Neren Rau told The Witness that the increase in the TAI was not surprising, given the annual festive season spending rush.

However, the slump in the TEI is particularly worrying, as this index has historically had a positive bias.

Rau said the outlook for 2013 remained bleak. “At the start of the year we had hoped for, and predicted a better year. However, we are ending off the year on a poor note and it looks as if we will start off the year on a poor note.

“It’s going to be quite tough six months into 2013. This consumer behaviour is set to continue.”

He expressed concern that businesses continue to be hit by cost pressures, particularly rising labour costs. “Rising input and selling prices are a major cause for concern going into 2013.”

Another concern is that prices have been increasing amid subdued trade activity levels.

SALES and input prices in the TAI were largely stable between October and November 2012.

“The continued rise in labour costs, higher utility tariffs and a continued weakening of the rand affected input prices although tight trade conditions kept selling prices from increasing accordingly,” Sacci said.

The impact on expected prices of sales and inputs, however, is more visible in the price indices for the next six months.

“Sales prices are expected to increase by a further three index points to 68 (13 points up from July 2012) and input prices are expected to increase by two points to 75 (12 points up from July 2012]),” Sacci added.

— Witness Reporter.

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