Though the lowering of the repo rate by the SA Reserve Bank in January was a positive move which improved trading conditions – albeit at a depressed level – tight trade conditions remained. Photo: Supplied
Though the lowering of the repo rate by the SA Reserve Bank in January was a positive move which improved trading conditions – albeit at a depressed level – tight trade conditions remained. Photo: Supplied

SA trade conditions set to decline as expectations remain tight

By Siphelele Dludla Time of article published Feb 13, 2020

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JOAHNNESBURG – Trade conditions in South Africa will decline over the next six months as expectations remained tight in January due to external conditions, the SA Chamber of Commerce and Industry (Sacci) said on Thursday.

“Trade conditions remained tight in January 2020 with 57 percent of the respondents experiencing negative conditions while 54 percent of the respondents expect conditions to remain depressed in the next six months,” Sacci said.

“External conditions that continued to affect the trade environment included lack of general business confidence; decreased real disposable household income; cost of living that exceeds general inflation; job losses; weakening rand, and real increase in administered prices.”

Business confidence is currently at a 20-year low and the economy is now forecast to grow at 0.5 percent or less for 2019.

Household expenditure is expected to remain depressed over the medium- to long-term as retail sales for December, the festive season, were lower than expected as consumers were under pressure.

Sacci said the different elements of trade were mixed in January with sales and new orders well into negative territory, below the 50 index mark at 40 and 41 respectively.

It said the tight trade conditions continued to suppress sales prices with half the respondents reporting unchanged selling prices reflecting rigid and low demand.

Contrary to sticky sales prices, Sacci said 65 percent of the respondents continued to experience rising input costs – putting profits and the viability of business under pressure.

The Chamber said the erratic energy supply due to electricity blackouts and cable theft hampers trade with the costs of fuel and alternative energy supplies playing havoc with input costs.

It said employment opportunities remained scarce with the sub-index virtually unchanged at 44 compared to 45 in December.

It said employment prospects for the next six months remained subdued with the sub-index on employment expectations remaining on 38.

“Though the lowering of the repo rate by the SA Reserve Bank in January was a positive move which improved trading conditions – albeit at a depressed level, tight trade conditions remained,” Sacci said.

BUSINESS REPORT

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