World Economy

South Africa Trade in Decline

South Africa Trade in DeclineSouth Africa Trade in Decline

South Africa’s trade conditions worsened in July as new orders and sales volumes fell amid weak demand and low economic growth, a South African Chamber of Commerce and Industry index showed on Monday.

SACCI’s seasonally adjusted monthly trade activity index fell to 47 in July from 51 in June. The seasonally adjusted TAI was one point lower in July 2016 than the 48 in July 2015, SACCI said. A reading of below 50 shows falling trade activity, BDLive reported.

Respondents cited a decline in economic activity, the influence of trade unions, and a non-committal approach by government to pro-business policies as other factors that negatively affected trading. The tight trade environment also led to businesses reporting muted return on assets and sharp declines in profit margins.

Price pressures eased further as the sub-indices of sales prices and input price indices continued to decline in July 2016. The sales price index declined by five points to 54 while the input price index was down 13 points to 56 from 69 in June.

SACCI released another more forward looking index, which showed that while businesses were less concerned about input costs over the next six months, they were likely to retrench workers.

The trade expectations index declined by two points but remained in positive territory at 52 in July.

Stable interest rates, the stronger and less volatile rand and a decline in the fuel price gave scope for lower inflationary expectations.

Despite this, rising energy costs, and higher wage and salary demands were expected to put pressure on profit margins, leading to a strain on job creation and further constrain an already struggling trade sector, SACCI warned.