Optimism after elections lifts trade conditions in May

Trade conditions, although weak, improved in May and the market expects economic conditions and business climate to lift in the short to medium term.

According to the South African Chamber of Commerce and Industry (Sacci) Trade Activity Index for May, released on Wednesday, trade activity improved with the index rising to 41 points, compared to 37 reported in April.

This comes following a tough environment in the first quarter when the retail, hotel, catering and wholesale sectors declined by 0.6%, compared to the same period in 2018. Foreign trade had also contracted in the first quarter, according to the Sacci report.  

Some of the challenges in the economic and business environment in May, according to respondents, included – a lack of policy implementation, industrial protests, uncertainty during the election period, less disposable household income, high unemployment, uncertainty of power supply and high fuel prices.

But the trade expectations index lifted from 39 in April to 49 in May on the back of the election outcomes. “The election results however improved expectations for better economic conditions and the business climate in the short to medium term,” the report read.

According to the report, weak trade conditions added pressure to sales prices. Respondents of the survey however expect lower sales prices to persist, but input costs are expected to continue rising.

As for employment expectations in the sector, respondents expect appointments to improve over the next six months.