Trade conditions show strong improvement: Sacci

JOHANNESBURG - Trade conditions for February improved strongly, the SA Chamber of Commerce and Industry (Sacci) said on Wednesday.

The chamber was releasing its monthly Trade Conditions Survey for February 2010.

It said in a statement that the Trade Activity Index (TAI), which reflected current trade conditions, improved to 54 in February.

This followed 42 in December 2009 and 44 in January 2010 as these months were susceptible to seasonal influences.

Not only had the TAI returned to positive territory (above 50), but it had also improved on the 51 measured in November 2009.

"It is 13 points higher than a year ago," Sacci said.

Sales and new orders were mainly responsible for the positive

trade conditions as reflected by the TAI in February.

The sub-index on sales volumes increased by 15 index points in

February after declining by 14 index points to 45 in December 2009

and improving slightly to 46 points in January 2010.

The new orders index improved by a successive eight points to 55

in February from 39 in December 2009.

Sacci said the supplier deliveries index also improved by eight

points to 50 in February.

The inventory index increased marginally to 47 in February

suggesting that re-stocking may have slowed for now given the

uncertainty about the strength of the economic recovery over the

medium term.

The index on selling prices ticked up to 54 in February from 51

in January 2010 while the input price index also increased by three

points to 61 in February.

"This indicates that inflationary pressures are mounting

particularly from input costs including the diesel price, which is

now 15.1 percent higher than a year ago," Sacci said.

Substantial direct and indirect electricity cost impacts would

add to inflationary pressure in months to come, Sacci said.

Looking six months ahead, respondents remained optimistic as the

Trade Expectations Index (TEI) stayed on a high level of 68 in

February 2010 after measuring 67 points in January 2010.

"This positive outlook factors in the impact of the 2010 World

Cup Soccer event as well as anticipated stronger economic recovery

in the second half of 2010," Sacci said.

Sales expectations gained one point in February on a high of 76

recorded in January 2010.

Expectations for new orders registered 70 -- slightly lower than

the 72 in January 2010.

Sacci said the index on six month prospects for supplier

deliveries increased from 64 in January 2010 to 67 in February.

The indices on expected selling and input prices for January

2010 suggested that inflationary expectations had declined in

February 2010.

The input price expectations index declined by two index points

to 70 while the selling price expectations index declined by one

point to 67 in February 2010.

"Current employment conditions in the trade environment improved

strongly in February 2010 as trade conditions, especially sales,

increased considerably," Sacci said.

The index rose by seven points to 48 in February -- suggesting

fewer lay-offs.

The employment prospects index increased to 57 in February after

measuring 55 in January 2010.

The index was well into positive territory for the fourth time

since November 2009 and supported greater employment opportunities

in the trade sector over the medium term, Sacci said.

- Sapa