SA Chamber of Commerce says business sentiment still buoyant

TRADE expectations for the next six months in South Africa have remained positive in spite of sentiment among businesses dipping in May as the possibility of stricter lockdown restrictions was fast becoming a reality.

The South African Chamber of Commerce and Industry (Sacci) said yesterday that trade conditions declined again in May as uncertainties weighed heavily on almost all elements of trade.

Sacci said that its Trade Activity Index (TAI) declined to 36 points in May after improving to 49 points in April.

It said the industry experienced lower sales volumes and less new orders, disrupted supplier deliveries, and higher sales prices during the month.

Sacci said that fewer backlogs on orders, improved inventory levels and a smaller rise but still high input costs were some positive developments that respondents reported lately.

Sacci chief executive Alan Mukoki said businesses had been impacted by hesitant local trade conditions.

Mukoki said respondents listed logistic transport problems at harbours, and criminal elements targeting deliveries and supplies on some main routes as conditions that were curtailing trade.

He said the strong rand made local manufactured goods less competitive to imported goods, but merchandise export trade was experiencing exceptionally buoyant conditions at present.

“The possibility of a stronger lockdown caused by the advent of a third wave of Covid-19 weighed on trade conditions,” Mukoki said.

“Trade expectations, however, remain in positive territory with 56 percent of respondents still positive about trade conditions six months hence.”

President Cyril Ramaphosa moved the country back to level 3 lockdown on Tuesday following weeks of consecutive increase in new Covid-19 cases.

The business industry had been expecting lockdown restrictions to be tightened during May as the vaccine roll-out programme had slowed.

The lockdown process had an adverse effect on business and a number of regular respondents went out of business in 2020.

Trade conditions reached an alltime low in April and May last year, with the TAI plummeting to 29 points when the lockdown was at its most stringent.

During the December 2020/January 2021 lockdown, trade conditions suffered a second severe Covid-19 lockdown that again negatively impacted trade (TAI 34 points).

However, trade expectations for the next six months have maintained a positive direction since March.

Mukoki said the prospects for employment and anticipated higher input costs were the only elements that were seen to weigh negatively on trade conditions in the next six months.

He said the greater awareness by the government of the business and economic effect of the lockdown appeared to have a less inhibiting effect on trade conditions.

“The expected improved trade conditions could be met by relative stable sales prices although the inflationary process might be fuelled from a cost push side with higher fuel prices and increased water and electricity tariffs,” he said.