The South African Chamber of Commerce and Industry (Sacci) reports that an uncertain global trade climate, a restrained real local economic performance and excessive unemployment represent a compounded negative effect that has led to the present deteriorating trade conditions in South Africa.

The seasonally-adjusted trade conditions index decreased from 52 in July to 42 in August. Sacci points out that further interest rate cuts and the monetisation of pension fund investments had had a positive short-term financial effect on household disposable income in July.

However, the reality of the real economy being under considerable stress and its effect on trade resurfaced in August, says Sacci.

"Whereas respondents experienced positive conditions in March, April and July, a reality check kicked in during August, with only 40% of respondents to the survey having a positive overall trade experience," it notes.

Sixty-nine per cent of participants in May expected trade conditions to improve over the next six months, but in August, only 58% of the respondents were positive about trade in the six months ahead.

"The real effect of global trade uncertainty and the direct and multiplying effect it has on local businesses has lately surfaced through announcements of local and global businesses terminating or decreasing their exposure in South Africa. It, therefore, appears that actions need to be urgently taken to address the present negative business and economic impact and urgently direct policy to prevent the situation from escalating," Sacci states.

According to the August survey, the trade outlook for the next six months deteriorated over all the elements of trade. Whereas 67% of the respondents were positive about the trade outlook six months ago, 58% had a positive six-month outlook in August. Expectations on sales volumes weakened notably along with rising input costs on the cards.

"Lower interest rates and trade activities like increased new-vehicle sales, rising volumes of merchandise imports, increased inward overseas tourists, increased real value of building plans passed and rising share prices on the JSE, all contributed to positive business sentiment.

"However, a serious reminder should be noted of the encompassing real economic performance and global business and investor sentiment. Worrying trends of merchandise export volumes and real retail sales that declined, however, imply that the business environment and global trade may become exceedingly perplexing.

"Notwithstanding the unstable and varying trade conditions, respondents did not indicate adjustments to employment of staff - now or in the next six months," Sacci notes.