After bordering on positive territory in January, trade conditions became restrained and deteriorated in February and March, the South African Chamber of Commerce and Industry’s (Sacci’s) Trade Conditions Survey for March shows.

Sluggish economic growth had a significant impact on the trade environment, while lower export volumes as a result of logistical issues at ports, supply chain disruptions, higher inflation and rising interest rates led to cautionary and selective spending by businesses and households in March.

The Trade Activity Index fell from 48.1 in the fourth quarter of 2021 to 43.1 in the first quarter of this year.

Despite the fact that easier Covid-19 regulations aided in the normalisation of economic conditions, the Russian-Ukraine conflict increased global uncertainty, Sacci notes.

Trade expectations for the next six months have also fallen, with the Trade Expectations Index (TEI) having fallen by 6.9 index points month-on-month in March.

Sales volumes, supplier deliveries and inventories were all negatively impacted in February.

Although sales volumes improved slightly in March, new orders, in particular, remained subdued.

However, expectations on all major trade components improved significantly in March, with the seasonally adjusted TEI having increased by 17 index points between February and March.

Inflationary pressures continue to loom on both the input cost and demand sides, and respondents expect the inflationary process to accelerate.

Rising fuel prices, higher wage demands and higher interest rates are putting a strain on business profitability in the trade environment and more than 80% of respondents anticipate rising sales prices and input costs.

Respondents listed load-shedding, dysfunctional local governments, law and order and logistical transport issues as pressing external factors restraining trade conditions.

Unaffordable wage demands in the current economic climate have contributed to tight and negative employment in the trade sector.

Only 28% of respondents said they were hiring more people right now, despite the fact that improved trade expectations may result in more job opportunities, which are still in negative territory.