Slightly Improved Trade Expectations

Slightly Improved Trade Expectations
September Newsletter

Slightly Improved Trade Expectations

Trade conditions improved marginally in August 2019 although conditions remained tough. Expectations for the next six months suggest further improvement of present trade conditions.

The seasonally adjusted Trade Activity Index (TAI) improved – about a similar level as in August 2018. The seasonally adjusted Trade Expectations Index (TEI) which improved in August 2019 was better than in August 2018. Respondents expect all trade activity components in the next six months to improve except for sales prices.

Higher sales and input prices in August 2019 were a result of the severe trade conditions, which exerted more pressure on businesses to remain profitable. The slightly lower input prices (costs) continue to put pressure on profitability.  Reduced trade activity caused the backlog on orders to decline notably although stock levels rose as supplier deliveries increased in August 2019.

Apart from trade activity components, respondents mentioned that clients either are not honoring payments or pay late. The weak rand negatively influenced some high import propensity sectors while benefiting some exporters. The notable higher tariffs on water and electricity continue to impact trade costs.

The employment sub-index increased from 40 to 44 index points in August 2019.  Expected employment conditions improved as the sub-index on employment expectations rose to 43 from 36 in July 2019.