ECONOMY
Trade conditions strong for now
Posted Mon, 14 Aug 2006
Trade prospects in South Africa remained favourable for the next six months, the SA Chamber of Business and banking group Absa said on Friday. Last month, the trade expectations index — a measure of trade condition prospects for the next six months — rose marginally by one index point to 68, according to the Trade Activity Index, which is compiled from the Sacob/Absa Trade Conditions Survey. The TAI registered a reading of 54 in July compared to 56 in June, Sacob economist Richard Downing and Absa chief economist Christo Luus said. "Fewer respondents in the Sacob/Absa Trade Conditions Survey in SA have reported an increase in business conditions in July compared with June, which was down significantly on the exceptionally positive outcome of the May 2006 survey." "Although exceptionally favourable trade conditions might still occur because of seasonal factors towards year-end, conditions in general are expected to moderate," Downing said. "The dip in the TAI
can be ascribed to fewer numbers of respondents that reported an increase in sales, new orders and supplier deliveries, and a higher proportion that have experienced purchase and selling price pressures. "Roughly the same number of respondents has reported rising employment levels," Downing said. He said the positive expectations for the next six months have the holiday and festive season in sight and do not necessarily imply a continuation of the robust conditions of the past few months prior to June 2006. "Between May and July 2006 the index for price expectations on sales increased by four index points and the index for expectations on input prices rose by no less than nine index points between May 2006 and July 2006." Luüs said economic factors like higher interest rates and fuel prices together with the rising inflation, had an adverse effect on trade conditions. "However, despite these setbacks, business trade conditions remained relatively strong and
generally showed a further improvement on a year ago. "The somewhat weaker rand seems to be benefiting the manufacturing sector and our exports, although the possibility of yet higher interest rates is bound to have a slightly negative effect on trade conditions. "But barring any negative shocks to our balance of payments, the economy is still expected to maintain a rate of growth of some 4.0 percent in 2006," Luüs said.
Sapa
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