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South Africa: Outlook for Trade Reaches New Low
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Business Day (Johannesburg)
16 May 2008
Posted to the web 16 May 2008
Mariam Isa
Johannesburg
TRADE activity in SA stayed stuck at low levels last month, while expectations over a six- month horizon fell to a record low, a survey from the South African Chamber of Commerce and Industry (SACCI) showed.
The SACCI's trade activity index was unchanged at 45 last month, while its trade expectations index dived from 52 in March to 48 last month -- a record low since the business survey began in August 2001.
"The prospects for an improvement in trade conditions appear uncertain," the chamber said yesterday. "Tighter financial conditions could further worsen trade prospects without a definite turning point in sight over the short term."
This was a reference to higher interest rates -- they have climbed 4,5 percentage points since June 2006.
More rate hikes are expected this year, as price pressures stoked by the rising cost of food and fuel push inflation higher.
The SACCI's trade expectations index has been steadily falling from a peak of 70 in January last year. A sub-index covering sales expectations also dipped to 51 last month from 54 in March, while a new orders sub-index fell 5 points to 47. The 50 level is a cutoff point between expansion and contraction.
The chamber's trade conditions survey covers responses from about 600 businesses from a range of sectors each month. It differs from the business confidence index, a composite of several economic indicators.
The SACCI said inflation pressure continued to climb, with its index on selling prices unchanged at 75 last month -- its highest since April 2002.
SA's main inflation gauge rose at an annual rate of 10,1% in March and is expected to creep higher in the next few months, breaking a prior record of 11,3% in the final two months of 2002.
"Faster rising prices remain a strong possibility during the next six months, as fuel and food prices continue to climb," the business chamber said.
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Employment indices also sent a negative message, with the employment index steady at 47 last month, while prospects on a six-month horizon dipped to 47 from 48 in March.
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