As the trade environment experiences tensions caused by global trade uncertainty and local subdued economic performance and high levels of unemployment, the South Africa Chamber of Commerce and Industry (Sacci) Trade Conditions Survey for May and June retracted into negative territory from an improved positive position in March and April.

During the first six months of this year, Sacci notes, trade conditions started off relatively weak, improved into positive terrain, but then again ended weaker in May and June.

Whereas 56% of respondents experienced positive conditions in March, the trade climate gradually weakened, with only 46% of respondents positive about their trade experience in May and June.

However, 51% of the respondents indicated that trade conditions in June were better than in June 2024.

Compared with the 69% of participants in May expecting trade conditions to improve over the next six months, in June only 62% were positive about the next six months, says Sacci.

“The disappointing economic performance at present, and a globally uncertain economic and trade environment, contributed to a less favourable trade outlook. It, therefore, remains inevitable that the actions taken to enhance the local economic performance must be continued and enhanced.”

The chamber notes that consumer inflation that stayed low at 2.8% in May and producer inflation that measured 0.1% provided some comfort to households and producers.

The latest increase in the fuel price could have been higher if the rand had not strengthened against the dollar in June, it points out.

Sacci warns that rising municipal tariffs and property tax may further distort inflationary expectations and thus disturb the prospects for lower interest rates, noting that real interest rates remain at an uncomfortably high level.

It explains that the trade outlook for the next six months deteriorated, with expected lower sales volumes, fewer new orders and decreasing supplier deliveries. Whereas 75% of the respondents were positive about the trade outlook in December 2024, 65% had a positive six-month outlook in June.

The downward drift of expectations is in accordance with uncertainty and an anticipated limited performance by the local economy, says Sacci.

Recent data on trade activities such as new-vehicle sales being up by over 18% year-on-year, retail sales at over 5% year-on-year, inward overseas tourists at over 3% year-on-year, and merchandise import volumes at over 3% year-on-year, confirm certain positive trade developments.

New-vehicle sales, notably as a leading indicator, suggest an upward momentum in the first half of this year.

Merchandise export volumes declining by 10% year-on-year and the real value of building plans passed decreasing by 16% year-on-year, however, imply disparity among various trade activities.

Sacci warns that uncertainty of global trade prospects may become exceedingly perplexing in the near future, noting that global trade relations will be critical to trade conditions for South Africa owing to its open economy and its inward linkages.

“Although trade conditions recently showed some sensitivity, respondents do not anticipate drastic adjustments to employment of staff, now or in the next six months,” it says.