Trade outlook appears positive for coming months

TRADE ACTIVITY is expected to pick up in the next six months, according to the SA Trade Management Indices (SATMI), jointly compiled by the Standard Bank and Sacob. The sales volume component of the trade activity index (TAI) dropped by 10 index points in July compared to January Ð and, said the report, "this suggests that respondents perceive current trade conditions to have deteriorated compared to six months ago." But, according to the analysis, the future looks brighter. While the index fell to 50.8 in July, the finding is that - because it remained above the critical 50 level - the level of trade activity is still encouraging. Turning to the trade expectations index (TEI), the report said that expectations of future trade conditions were more favourable in July than the prevailing trade conditions might have suggested. "The TEI was recorded at 59.6 in July," said the report, "higher than the TEI in June. "Perhaps respondents expect interest rates to be lower in six months' time." It also expects sales volumes and new orders to increase significantly, although the expectations about employment remain weak. What happens with inflation and the interest rate adjustment will decide the future movement in trade activity, according to the report. "Stability in the rand exhange rate, and a downward turn in food prices could help the inflationary outlook," it said. "Exporters are likely to benefit from an improvement in the global economy."