Trade Conditions More Positive

Trade conditions improved in May 2012.  The seasonally adjusted Trade Activity Index (TAI) gained 5 points to measure 56 in May 2012.  The better conditions are in correspondence with the relatively strong growth in the wholesale and retail trade, hotel and restaurant sector.  The non-seasonally adjusted TAI stood at 55 in May 2012 compared to 48 in April 2012 and 49 in May 2011.   

Sales and new orders recovered strongly to 64 and 58 compared to 50 for both indices in April 2012.  A year ago the sales volume index was 56 and the new orders index 46.  The inventories index increased moderately to 51 from 47 in April 2012 following strong inventory build-ups in both February and March 2012.  Supplier deliveries recovered by 6 index points.  The fewer trading days in April played a significant role in weaker trade activity in April 2012 compared to May. 

The indices for sales and input prices decreased from 63 and 72 in April 2012 to 59 and 68 respectively in May 2012.  Price pressures were moderated despite administered prices that rose by an average of 12%.  The effect of the weaker rand is yet to trigger higher prices.  

Trade expectations remained positive but tapered down further in May 2012 with the TEI (Trade Expectations Index) at 57, i.e. 7 points lower than in April 2012 and 4 points lower than in May 2011.  Expectations are following the same pattern as in 2011 where the initial bullish outlook was moderated during the year.  Weak economic conditions will continue to weigh on trade conditions in the coming months.

The six month outlook for key components of trade activity contracted in May 2012 and sales and input price expectations eased notably to 61 and 68 compared to 68 and 75 respectively in April 2012.  Inventories are expected to decline further.  Supplier deliveries remained in positive territory and were virtually unchanged. 

Employment conditions in the trade environment worsened during May 2012 as the index moved from 43 to 41 in negative territory. 

The outlook for employment index weakened to 49 – down from 55 in April 2012.

For more information, click here or contact: Richard Downing                         Neren Rau Economist for SACCI      SACCI CEO Cell: 082 822 5566      Phone: 011 - 446 3800