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The number of businesses that experienced improved trade conditions increased from 35% to 48% over the last six months even though (fifty six percent) just over half of the respondents experienced better trade conditions in August 2022 than a year ago. The power constraints and fuel price hikes would inevitably impact on this picture to the negative. Output growth in the trade, catering and accommodation sector slowed to 0.7% y/y in the 2nd quarter of 2022 compared to 6% y/y growth in the 1st quarter of 2022.

Although 59% of the respondents had optimistic expectations in April 2022, expectations in August for the next six months declined to 56% positive respondents. All components of trade activity including sales, new orders and the backlog on orders improved over the six months prior to August. It is notable that 49% of respondents are employing more staff than the 28% in March 2022. In general trade conditions had stabilised over July and August but the slowing down is already evident.

Inflationary pressures that were intensifying over the first seven months of 2022 appeared to be plateauing out in August 2022. 70% of respondents saw sales prices increasing in August with 67% anticipate sales prices rising over the next six months. Operating costs also slowed as 88% (91% in July) of respondents experienced rising input prices/tariffs while 82% still continue to believe input prices will continue to rise over the next six months. Although fuel prices lately declined slightly in August, the price of diesel as a basic input for instance was still 57% higher than in August 2021. 

The multiplying effect of fuel and basic inputs led to consumer inflation reaching 7.8% in July 2022 and producer inflation at 18%. With higher interest rates and real household spending under pressure, the inherent cost push dynamics will continue to restrain the trade environment.  

In addition, load shedding, the consistently high crime rate and logistical constraints are among the most pressing external factors listed by respondents to stifle trade. Hospitality and notably accommodation and events venues are starting to show some signs of recovery which is very encouraging with the last quarter of the year normally serving as a peak period. Respondents complain that government is not assisting and does not respond to calls to engage with SMME's as one of the biggest sectors that can improve the ailing economy and create jobs. Respondents also noted that consumers are very price sensitive and scaling down to more affordable products and services.

The trade conditions (still subdued with TAI below 50) although fragile, still managed to notch up an increase in employment with 49% of respondents increasing their staff in August 2022. After only 43% of the respondents in July expected to hire more staff over the next six months, some 45% in August intended to increase staff over the next six months.

Issued by SACCI