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South African businesses expect business conditions to ease over the next six months and move into positive territory after the turmoil in July and August.
The South African Chamber of Commerce and Industry (Sacci) said yesterday that the dynamics of trading conditions remained in negative territory in September.
Sacci said the Trade Activity Index (TAI) was at 39 points in September, below the 50 point mark between contraction and expansion.
TAI was temporarily halted in July and fell to its lowest level this year at 34 points due to a supply chain disruption during civil unrest, and fell back to 39 points in August.
Trade has been severely hampered as thousands of businesses were vandalized, looted and torched in July during the most violent civil unrest in post-apartheid South Africa.
However, trading conditions appear to be picking up, albeit at a moderate pace, as the government stepped in to restore order and lockdown restrictions were relaxed.
Sacci said sales volumes improved but remained depressed as new orders declined in September.
He said stocks and supplier deliveries remained relatively flat in September and that is expected to continue over the next six months.
Due to the turbulent business environment, selling prices were more erratic and had recently fallen, but selling prices are expected to increase at an accelerated pace over the next six months.
Expectations for sales volumes and new orders were however on positive territory, with the indices measuring around 60 points.
Sacci said most of those polled expected a noticeable increase in input costs over the next six months, with municipal tariffs and rising fuel prices being the main contributors to these increases.
Sacci’s senior economist Richard Downing said the uncertainty surrounding the Covid-19 lockdown restrictions and the effect on the economy was a contributing factor to the instability of the business environment, especially for entertainment, food and accommodation.
“Respondents consider the slowness of vaccination to be detrimental to the normalization of commercial activity.
“Law and order enforcement and the provision of municipal services are areas of concern,” said Downing.
“The volatility of the Rand’s exchange rate has been reported to complicate cross-border trade. Job losses have also been reported to affect consumer demand at the retail level.
The issue of job losses was not surprising, as the unemployment rate remains the highest on record, with more than 580,000 people losing their jobs in the second quarter.
Downing said employment in the business environment remained in negative territory in September and is unlikely to improve over the next six months.
The government will provide an update today on the support that has been extended to businesses affected by the unrest.
So far, the Industrial Development Corporation and the National Empowerment Fund have collectively approved funding for more than 120 companies to help businesses rebuild and maintain jobs.
Trading conditions for businesses in September are expected to ease after the turmoil caused by civil unrest in July
Source link Trading conditions for businesses in September are expected to ease after the turmoil caused by civil unrest in July