Softer but lively SA trade conditions

The SA trade activity index has been in negative territory for two consecutive months now, although the normal cyclical downturn in January was less pronounced, according to the re-launched SACOB SA Trade Activity Index, which is now sponsored by ABSA.

Christo Luus, chief economist at ABSA says the world generally is in good nick economically, besides some concerns about the US economy. Locally, the national budget will see money flowing back into consumers pockets, and durable product consumption will be high, but lower than we have seen in the last year or so.

The survey reports that there is a new impetus locally, although trade conditions are not predicted to be a vigorous as was the case in 2004 and 2005.

SACOB economist Richard Downing says that January was characterized by new orders dipping further, inventory levels remained low, sales prices increased, although input prices declined further, order backlogs were down, supplier deliveries continued to decline, while on the up side job creation remained in positive territory.

While the environment showed that softer trade conditions prevailed there was a lot of lively trade, Downing cautioned that there was a danger of demand inflationary pressure emerging as the limits of capacity utilization are tested.

In terms of expectations Downing says that business is generally more optimistic than reality dictates, or more accurately than is depicted by the statistics collected. In fact the expectations are at record levels, going back to when the index first saw the light five years ago.

Note:

300 businesses took part in this initial survey out of a potential sample size of 700 businesses, across the entire commercial spectrum, with plans to include all businesses operating in SA, regardless of whether they are members of SACOB or not.

There is a website where businesses can register to take part in the monthly survey.