Embargo: 11:30 – 18 November 2024
Cautionary Note on Survey:
This is a monthly SACCI survey and does not claim to present overall trade conditions. The survey does not only entertain SACCI members. The results should be interpreted with the necessary circumspection
Trade Expectations Moderated by Reality
Trade expectations have adjusted to economic realities following the initial optimism surrounding the formation of a more politically representative government. Significant progress on potential collaboration to improve economic performance and address economic challenges initially led to a spike in expectations. However, SACCI’s Trade Survey suggests that certain structural economic impediments have tempered the early over-optimistic outlook. The anticipated improvement in economic performance, which could bolster trade conditions, is expected to take longer to materialize.
Trade conditions showed slower improvement in August 2024, coming under further pressure since then, with only about a third of respondents reporting positive trade conditions in October 2024—a level similar to that of October 2023. The six-month trade outlook for participants became less optimistic, declining from nearly 70% in July 2024 to below 55% in October 2024.
The sales volumes index fell from 55 in July 2024 to 37 in October 2024, with new orders also declining from 48 to 32. Supply deliveries and inventory levels have decreased, reflecting current tight trade conditions. The six-month outlook was revised in October, with around 60% of participants anticipating increased sales, down from 71% in July 2024. Inventory levels are also lower.
Between September and October 2024, input costs rose by 11 index points, while sales prices increased by a more moderate 2 index points, indicating cost absorption by businesses. Both input costs and sales prices are expected to rise significantly over the next six months. Despite the current slower pace of consumer and producer price increases, inflationary expectations may heighten, potentially influencing a cautious monetary stance from the South African Reserve Bank. Although consumer inflation (3.8%) and producer inflation (0.9%) trended lower in September, a more substantial reduction in interest rates could stimulate real demand, potentially improving trade conditions in the short term.
Recent data on trade activities, despite a challenging economic environment marked by slow growth and high unemployment, show mixed results. Year-on-year changes include the following: retail sales volumes rose by 3.2%, merchandise export volumes by 2.6%, and the real value of building plans passed by 2%. In contrast, merchandise import volumes fell by 6.8%, new vehicle sales increased by 5.4%, and merchandise exports to neighbouring countries grew by 0.5%. These figures indicate that trade has been generally positive compared to a year ago.
The subdued economic performance, challenging trade conditions, and tight profit margins have adversely affected employment in the trade sector. Only 32% of respondents reported hiring staff in October, and 42% plan to hire more within the next six months, down from 58% in September 2024.Released by the South African Chamber of Commerce and Industry at their offices in Illovo, Johannesburg. For more information and infographic, see the SACCI website – www.sacci.org.za or contact:
Alan Mukoki SACCI CEO Cell: 082 551 1159
Richard Downing Economist Cell: 082 822 5566
For a full background to this month’s SACCI BCI see the full BCI report on www.sacci.org.za
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