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Trade activity in negative territory in July

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The Trade Activity Index (TAI) declined by four index points in July, said the South African Chamber of Commerce and Industry (Sacci).

The seasonally adjusted composite Trade Activity Index (TAI) declined by 4 index points to 48 in July 2014, from 52 in June 2014, said Sacci on Thursday.

The trade conditions index was stable and has been close to the 50 mark since February 2014.

“July was the first month in 2014 in which trade conditions dipped well below 50. With uncertain economic prospects, pressure on the trade sector is broad based and all trade activity sub-indices were in negative territory in July 2014,” said Sacci.

The July 2014 TAI is 10 index points below the July 2013 TAI.

According to Sacci, the sales volumes sub-index was eight points lower than in July 2013 while the new orders sub-index is 15 points lower than in July 2013 and indicative of a challenging period ahead.

Even supplier deliveries, which was above 50 points for the last five months, plunged to 39 in June 2014. The inventories index in July declined by five index points to 48.

The softer trade conditions took some pressure off prices as the selling price sub-index decreased by 6 index points to 58 while the input price index remained on 70 – much higher than the selling price index.

“This divergence in prices will further squeeze profit margins. Real financing costs increased as interest rates rose by 0.25 percentage points thereby placing more pressure on debt burdened consumers and increasing financing costs for businesses,” explained Sacci.

Price expectations softened with both the selling and input price expectations indices retracting in July.

In July 2014, the employment conditions index in the trade environment contracted to 46 from 48 in June 2014. “The prospects for employment in the trade sector, however, improved to 51 following the earlier increase by 1 index point in June 2014.” – SAnews.gov.za

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Alan Straton

Chief Cook, Bottle Washer and Broom Mechanic at MyPE
Passionate about Port Elizabeth and definitely NOT packing for Perth. Alan's ethos is epitomised in the words of Nelson Mandela; "I have fought against white domination and I have fought against black domination. I have cherished the idea of a democratic and free society. If need be, it is an ideal for which I am prepared to die." See more articles by Alan.