Depressed Trade Conditions
Trade conditions are approaching the desperate levels experienced towards the middle of 2009 after the great recession of 2007/08. The December 2015 seasonally adjusted composite Trade Activity Index (TAI) measured 39 compared to 42 in November 2015. The December 2014 seasonally adjusted TAI was 17 index points higher than the figure recorded for December 2015. The TAI annual average for 2015 declined to 47 compared to 50 for 2014.
The non-seasonally adjusted TAI declined to 33 compared to 48 in December 2014. Real domestic final demand (GDE) as well as lower export volumes reflect a dull economic environment. The higher interest rates, the much weaker rand exchange rate, debt strapped consumers and the lower credit rating further add to depressed trade.
The sales volumes sub-index dropped from 46 in November 2015 to 30 while new orders followed, declining by 18 points to 26 – indicating that only 26% of the respondents experienced rising orders in December. Supplier deliveries dropped to 29 from 44 in November 2015 while the inventories sub-index declined from 52 in November to 43 in December 2015. The sales price sub-index increased by 3 points to 60 while the input prices sub-index rose to 69 – reflecting rising price pressures in December.
Trade expectations for the next six months also remain subdued and confirm the declining expectations in the second half of 2015. The seasonally adjusted Trade Expectations Index (TEI) of 49 in November 2015 moved further into negative territory to 42 in December 2015. Sales and new order expectations declined by 1 point each in December 2015 from 44 and 39 in November 2015 respectively. Price expectations were much more negative as the sales price expectations index increased by 8 index points while input price expectations increased by 9 index points to 78.
The employment situation in the trade sector dipped to 47 in December 2015 as the employment sub-index declined by 2 index points. The sub-index on employment prospects dropped by 9 points to 47.
For more information, see the SACCI website, www.sacci.org.za or contact:
Richard Downing Economist for SACCI Cell: 082 822 5566