Trade conditions lacklustre in August

"Trade conditions have been tighter since April 2012 and continue to provide lacklustre performance," said Sacci as it released its monthly Trade Conditions Survey.

According to Sacci, although the seasonally adjusted Trade Activity Index (TAI) recovered by five points to 50 in August 2012, it remains below levels that were achieved earlier in the year; while a year ago the seasonally adjusted TAI was at 48 points.

The non-seasonally adjusted TAI remained in negative territory in August at 49 - up from 45 in July.

"Trade conditions continue to be volatile but the activities surveyed are converging around the 50 index level as is notably the case with sales and new orders," said the chamber, adding that the sales and new orders indices both registered 49 in August after reaching levels of around 60 in May.

The inventories index increased from 45 to 48 in August 2012 with supplier deliveries improving from 42 in July to 50 in August 2012.

Sales and input prices were stable as the sales price index rose by a point to 58 and the input price index declined by a point to 65 in August.

"Although price pressures at present remain at bay, cost increases of especially administered prices are more than double that of the producer inflation rate. The weaker trade conditions make it difficult to cope with these rising costs. The latest year-on-year rise in the pump price of diesel was 17.6%," said Sacci.

The six-month Trade Expectations Index was down by about 10 points from earlier in the year, remaining at 54 in August after reaching average levels above 60 up to June 2012.

Slowing global trade, the uncertainty about the real spending by households and tight investment spending, adversely impact on trade expectations.

"The six-month outlook for the key components of trade activity confirms the tentative nature of current trade conditions. After picking up in June, the sales and new order expectations indices remained at lower levels of 64 and 56 respectively in August.

"The current volatile trade conditions also led to anticipated lower inventory holdings. Supplier deliveries are expected to improve into positive territory by registering 51 in August up from 47 in July 2012."

In the trade environment employment conditions improved somewhat as the index increased from 45 to 48 although still in negative territory.

"Employment prospects declined slightly as the index lost two points to register 48; this is about the same as the August 2011 level when the then robust labour action abated," noted Sacci.