Trade conditions tightened in August 2013 as respondents experienced a less favourable environment which also effected a downward revision in their six-month outlook. From April 2013, when the Trade Activity Index (TAI) stood at 61, the index gradually deteriorated to 52 in August 2013. Trade expectations held up reasonably well and over the same period the Trade Expectations Index (TEI) declined from 64 to 61.
The seasonally adjusted TAI decreased by 3 points from July 2013 to measure 53 in August 2013. The sales volumes and new orders indices declined by a substantial 9 and 12 points respectively. Supplier deliveries declined by 5 points to 48 in August 2013 and there are concerns of increasing pressures on this index due to the impact of strikes. Inventory increases were caused by the much lower sales volumes while backlogs on orders also eased.
In August 2013, 65% of respondents indicated lower sales prices compared to 66% in June. A notably high 77% of the respondents experienced rising input costs in August 2013 - similar to July 2013. The 77% is notably higher than the 69% of August 2011 and the 66% of August 2012. Fuel prices (diesel 15% y/y), administered prices (11% y/y) and prices of imported goods (8.9% y/y) contributed considerably to the cost-push inflation experienced currently. Excessive wage demands in the current context will aggravate the inflationary process and lead to even tighter trade conditions as well as have adverse implications for employment creation.
The trade expectations index (TEI) remained in positive territory at 61 in August 2013 and was slightly down on the July 2013 readings. The outlook for sales volumes, new orders, inventories and supplies were down by 1 to 2 index points in each case. The expected pressure on input and sales prices will remain high as respectively 77% and 69% of respondents expect prices to increase in the next six months.
Employment conditions in the trade sector remain stable with the August 2013 index just into positive territory at 51. The employment prospects index declined from 52 in July to 51 in August 2012 suggesting a stagnant but stable employment situation in the trade sector in the short-term.