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Trade conditions remained largely unchanged, maintaining a slightly negative trend consistent with the first six months of 2023. While there were occasional positive seasonal fluctuations, overall trade conditions did not show significant improvement. In June 2023, only around 38% of respondents reported better trade conditions compared to the same period in the previous year, indicating a limited positive impact. Notably, trade expectations had previously exhibited a positive outlook over the past twelve months. However, during the first half of 2023, a noticeable disparity emerged between these expectations and the prevailing trade conditions. In June, approximately 55% of respondents anticipated an improvement in trade activities over the next six months, a slight decrease compared to the 59% of positive respondents recorded in January 2023.

Sales volumes experienced a significant decline during the months of May and June, while new orders continued to show negative trends throughout May and June 2023. Supply chain challenges were evident in May but showed improvement in June. As a result of declining sales volumes, inventories notably increased in both May and June. Despite 79% of respondents reporting rising input costs and absorbing the associated expenses, weak demand led to a slower rate of increase in sales prices.

Despite a decline in current sales volumes, there has been a notable improvement in expectations for sales in the next six months, as indicated by the survey scope. This positive outlook is supported by an increase in expectations for new orders. It is also anticipated that supplier deliveries will improve while inventories remain stable. Over the next six months, there is a possibility of marginal decreases in sales prices and input costs, as the inflationary pressures are expected to ease further.

Recent data reveal that real retail trade is still facing challenges, but there have been year-on-year improvements in import and export merchandise trade volumes as well as new vehicle sales. However, the tourism sector is currently experiencing a declining trend, despite an increase in the number of inbound tourists compared to the previous year. The impact of electricity load shedding and efforts to provide alternative power sources continue to weigh on businesses and input costs. Fortunately, there have been fewer disruptions to trade activity due to recent improvements in electricity supply by Eskom.

Higher debt levels and increased interest rates have resulted in higher debt servicing costs, negatively affecting real demand from clients and impacting the financial position of businesses.

The challenging trade environment has had a negative impact on employment in the sector. However, there has been a slight improvement in staff hiring during May and June 2023, although the employment sub-index remains at 42, below the stable level of 50. Expectations for employment opportunities in this sector over the next six months remain weak.