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- South African businesses are less positive on the outlook for trade conditions in the next six months, according to an index by the SA Chamber of Commerce and Industry.
- The index indicates that employment conditions in the trade sector weakened in November after an improvement in October 2020.
- However, certain trade categories such as trading technology and home office related equipment and hardware, experienced improving conditions.
Greater realism and disappointment with Black Friday sales seems to have made South African businesses less positive on the outlook for trade conditions in the next six months, according to the Trade Expectations Index (TEI), released by the SA Chamber of Commerce and Industry on Tuesday.
The index reflects that, in general, respondents saw the continuing Covid-19 lockdown process, the general economic situation, input costs - especially staffing and adverse conditions in the hospitality industry - as the main causes contributing to dampened trade expectations.
However, certain trade categories such as trading technology and home office related equipment and hardware, experienced improving conditions.
The index also indicates that employment conditions in the trade sector weakened in November after it improved in October 2020.
In the near future it does not seem evident that the trade sector will contribute to alleviate the present high unemployment challenge, according to the index report.
The TEI dipped again in November 2020 with a level of 43, after a more upbeat level of 54 in October 2020 and 56 in September 2020. A reading of more than 50 is regarded as more positive, while a level below 50 is seen as more negative.
The index report points out that the improvement in trade conditions in October 2020 came on the back of easier lockdown restrictions. It seems, though, that in November the positive sentiment gave way to facing the reality of the prevailing business climate and tough economic conditions.
SACCI's Trade Activity Index (TAI) also showed a dip in November - from a level of 51 in October to 47 in November, therefore back in negative territory.
Sub-categories
Trade components like sales volumes, new orders and supply deliveries, dipped notably between October and November, according to the index report and the new orders index declined as well.
About 67% of respondents indicated that trade conditions in November 2020 were worse than in November 2019. SACCI says initial feedback on Black Friday suggests that businesses experienced less activity than anticipated. Nevertheless, Black Friday sales volumes were still well into positive territory.
Expectations on all trade components like sales volumes, new orders, supplies, backlog on orders, and inventories, declined markedly between October and November 2020, the sub-index shows. Whereas 54% of respondents were positive on trade conditions for the next six months in October 2020, only 43% felt positive in November 2020.
"The tight trade conditions filtered through to prices where present and expected sales and input prices remained virtually unchanged from the October to the November surveys," states the index report.
* Compiled by Carin Smith
