July trade conditions subdued

The monthly results of the survey released by SACCI showed that the Trade Activity Index (TAI) which reflects current trade conditions increased by one point to 49 in July 2010. It however performed seven points better than it did in July 2009.

"The build-up in trade activity to May 2010 was dampened in June despite high expectations in relation to trade (during) the World Cup event; trade conditions remained subdued in July 2010," said SACCI.

There was slight improvement in the major sub-indices of trade activity in July 2010. A backlog on orders, lower inventories and a weak employment environment constrained trade conditions. The sales volumes sub-index gained four points to 55 points in July while the sub index on new orders gained one index point.

"The supplier delivery index increased from 46 in June 2010 to 47 in July 2010 and some de-stocking took place in July in the aftermath of exceptional demand in tourism-related sectors during the World Cup."

The selling prices index declined from 52 in June to 49 in July while the input price index declined by one point to 58 in July suggesting that inflationary pressures are easing further.

Trade conditions expectations are still high with the Trade Expectations Index (TEI) rising by three points to reach 64 in July from 61 in June. A year ago the TEI which is a composite index of expectations on sales volumes and new orders among other things stood at 56.

"Expectations on sales and new orders increased while supplier deliveries and inventories are expected to improve over the next six months. Respondents do not expect increases in price pressures in the medium term," said SACCI.

SACCI said that employment conditions deteriorated further as the employment sub index moved deeper into negative territory in July. It lost one index point. However, the employment prospects index remained in positive territory increasing to 51 in July 2010 from 50 in June 2010.