SA businesses have negative view of trade conditions for rest of the year - index

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There seems to have been a "selected restrictive approach towards certain types of trade.
There seems to have been a "selected restrictive approach towards certain types of trade.

Trade conditions in South Africa were "distorted" as the nationwide lockdown dragged on from late March, the latest Trade Activity Index (TAI) by the SA Chamber of Commerce and Industry has shown.

The TAI is a composite index based on sales volumes, new orders, supplier deliveries, inventory levels and employment.

In addition to deepened recessionary economic conditions, there seems to have been a "selected restrictive approach towards certain types of trade", especially during the initial hard lockdown period, said the chamber. This had a serious effect on trade.

In April, 70% of respondents said they had a negative outlook of trading conditions in the future. And they remained sceptical in July with 62% maintaining a negative view about trade conditions for the rest of 2020.

The chamber said on Wednesday that while sales volumes and new orders improved in July from highly depressed levels in April, they remained around pre-lockdown recessionary levels.

"The interference in consumer choice for certain goods and services not only distorted prices, but also had multiplying effects beyond the trade environment of such goods and services."

"Employment in the affected sectors hence declined. Supplier deliveries and inventories were still below pre-lockdown levels in July."

Trade expectations for the next six months have recovered somewhat, but imply a slow recovery even if the lockdown level is reduced.

SACCI said that both sales and new orders are expected to recover but will remain sluggish towards year-end with the indices well below the 50 mark. Supplier deliveries and inventories will likely muddle through over the next six months.

Both sales and input prices, meanwhile, are expected to be facing upward pressure over the next six months as inflationary consequences re-emerge.  

Expectations for jobs in the trade sector towards year-end improved somewhat, with 34% of respondents hiring staff in July compared to 25% in June. 

SACCI's recently released Business Confidence Index showed that levels dropped to a seven-month low in March and deteriorated in April before hitting a record low in May. Confidence levels then rebounded in June and improved slightly in July, however still lower than in July last year.

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