Johannesburg - Trade conditions were stronger in February than they had been in the same month last year, the SA Chamber of Commerce and Industry (Sacci) said on Thursday.
“Trade activity improved in February 2014 and was at stronger levels than in January 2014 and in February 2013,” it said.
The Trade Activity Index (TAI) rose to 54, from 46 in January and 51 in February last year.
The seasonally adjusted TAI improved by four index points to 51 in February, Sacci said.
It was better than the 48 recorded in February 2013.
Faster credit growth helped to improve sales volumes and new orders despite the tight financial position of households in dealing with higher inflation and increased financing costs, and with businesses experiencing substantially higher input costs, Sacci said.
The easier credit availability did, however, raise the question of the sustainability of improved trade activity.
The sales volumes index also experienced an increase.
It rose from 44 in January to 55 in February while the new orders index picked up from 47 to 57.
“More new orders confirm the relatively positive outlook for sales volumes over the next six months.”
Inventories continued to expand with 55 percent of businesses surveyed expecting to increase stock levels.
Supplies were well provided and were expected to improve further over the next six months, Sacci said.
Sales and input price indices remained high in February on 66 and 80 respectively.
“The 80 for the input price index is an indication of the highest price pressures experienced since the recession of 2008 and 2009.”
The slightly improved rand exchange rate in February may help to smooth extensive input cost stress and price escalations, Sacci said.
Price expectations (sales and input) remained high but appeared to have peaked.
The level of input costs had nevertheless reached levels that narrowed already tight profit margins considerably.
The seasonally adjusted trade expectations index (TEI) remained on 58 in February - down from 61 in December.
Sacci said expectations for the components of trade activity did not change materially between January and February. However, overall trade expectations had been tapering off since August with the TEI gradually declining from 64 in July to 58 in February.
Current employment conditions increased from a low 45 in January to 50 in February.
The employment prospects index remained unchanged at 52 in February, Sacci said. - Sapa