SACCI : More Optimistic Trade Conditions

SACCI today released the results of its monthly Trade Conditions Survey for August 2008.

The Trade Activity Index (TAI) measures current trade conditions. The TAI picked up further in August 2008 to 46 after registering 43 in July. This followed on a steady decline from 50 in February 2008 to 42 in June 2008. Although more optimistic, these levels continue to reflect trade conditions in negative territory.

The sub-index on current sales volumes, after recording a relatively solid level of 55 in February 2008, deteriorated progressively to 42 in June 2008. It improved mildly to 45 in July 2008 and to 49 in August 2008. The new orders sub-index also confirms the improved mood and increased to 44 in August 2008 from 42 in July 2008.

The Trade Expectations Index (TEI), which explores trade conditions six months ahead, gradually declined to 46 in June 2008 from a high of 58 in February 2008. The TEI improved to 56 in August 2008 from 50 in July 2008. It appears as though the downward trend, which started from a high of 70 in January 2007 to 46 in May and June 2008, has turned. These expectations imply more optimistic trade prospects for 2009. Trade conditions tend to be turning as financial conditions and cost pressures appear to be easing. Although trade prospects may remain subdued over the short-term, the scene is set for recovery in the medium to longer term.

The sub-index on sales expectations picked up to 56 in July 2008 and accelerated to 62 in August 2008. The index on expected new orders improved by 7 index points to 58 in August 2008 after recording 51 in July 2008 and 46 in June 2008 and May 2008.

Inflationary pressures appear to be easing as the index on selling prices remained at 68 in August 2008 from 74 in June 2008 – still 8 points above the relatively low index level of December 2007. The input price index is down to 77 in August 2008 after recording 81 in July 2008 and 84 in June 2008. This index is still 10 points higher than the low of 67 in December 2007. The indices on expected input and sales prices also declined; this suggests that prices could rise at a slower rate over the next six months (survey period) as global fuel and food prices decrease from high levels earlier in 2008.

The August 2008 employment index improved to 46 after being as low as 42 in June 2008. Employment prospects in the trade environment recovered to 51 in August 2008 from the 46 in July 2008 thereby crossing over from negative to positive territory for the first time since March 2008.