Embargo: 11:30 – 16 July 2024
Improved Trade Conditions Expected
The outcome of the recent national and provincial elections called for more representative governance. The broader agreement by a Government of National Unity (GNU) on the need to address economic challenges collaboratively has filtered through to the trade environment. The May and June 2024 SACCI Trade Conditions Surveys therefore reflected a more positive tendency – also see the attached Infogram.
Starting off from a depressed level in 2024, trade conditions recovered gradually as the Trade Activity Index (TAI) reached its best level in June this year. Although still in negative territory with 47% of respondents positive about prevailing conditions, the six-month expectations of respondents increased further, with 55% expecting trade conditions to improve.
Important trade components like sales and new orders remained at improved levels in May and June. Supplier deliveries were unchanged, with lower inventory levels suggesting increased sales volumes. The expected increase in sales volumes, new orders, and supplier deliveries indicates the current optimism in the trade environment.
Continuing high input costs were still prevalent, although sales prices were relatively stable. However, respondents expect that sales prices and input costs will rise over the next six months. This potential future trend of rising prices may uphold inflationary pressures and cause the SA Reserve Bank to delay its decision on an easier monetary stance and lower interest rates.
The latest data releases on several trade activities also confirm the tight trade conditions that prevailed in the first six months of 2024. Real activity in the wholesale and retail trade, hotels, and restaurants sector declined by 1.8% y/y in 2023 and decreased by a further 2.3% y/y in the 1st quarter of 2024. Retail trade volumes only rose slightly by 0.6% y/y in April 2024. New vehicle sales were 7.5% lower in the first half of 2024 than in the corresponding period of 2023. Merchandise import volumes were 9.1% and merchandise export volumes 4.9% lower in the first five months of 2024 than in the corresponding period of 2023. More stable energy supply, augmented by increased electricity generation by the public and private sectors and lower fuel prices over the first six months of 2024, contributed positively to trade conditions.
Trade conditions had a relatively lesser effect on employment conditions in this sector. Currently, 43% of respondents continue to hire staff, while 40% of respondents are considering increasing employment in the next six months.
For more information, contact:
Alan Mukoki SACCI CEO 082 551 1159
Richard Downing SACCI Economist 082 822 5566