- Confidence levels in South Africa's trade sector have climbed to new highs during the fourth quarter of the year.
- The retail trade sector, in particular, has seen confidence rebound from a 29-year low recorded during the second quarter.
- But risks of a second wave of Covid-19 infections could still derail progress.
Confidence levels across South Africa's trade sector have shown massive improvements since the hard lockdown in April, but a second wave of Covid-19 infections may threaten progress, according to researchers.
The Bureau for Economic Research (BER) on Thursday released its retail trade survey results for the fourth quarter of the year.
It showed that retailer confidence levels, which measure satisfaction with business conditions, improved from a 29-year low of 11% in the second quarter to 50% in the fourth quarter. Wholesaler confidence improved from 4% in Q2 to a six-year high of 59% in the fourth quarter. Motor dealer confidence, meanwhile, rose from 2% in the second quarter to 41% due to sales improvements.
The improvements are much better than pre-crisis levels, and contributed to the improved RMB/BER Business Confidence Index – which is now at 40 index points.
"Major improvements can be seen across all trade categories, with retailer, wholesaler and new vehicle dealer confidence all increasing remarkably on the back of improved operating conditions, a noteworthy uptick in sales volumes and an overall improvement in profitability," the report read.
However BER pointed out that headwinds lie ahead, with the special Covid-19 relief grant expiring early next year, "billions" could be wiped from consumer incomes and the trade sector.
A second wav of Covid-19 infections, particularly in the Western cape and Eastern Cape could result in renewed lockdown restrictions to curb the spread of the virus. "[This] would be devastating to the trade sector during the festive season," the report read.
"Poorer-than-expected Black Friday and festive sales should not be ruled out amid virus fears and a weak Covid-19-induced labour market."