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According to the SACCI Trade Conditions Survey in February 2025, respondents experienced the best conditions since the middle of last year – i.e. after the formation of the GNU in June 2024. However, with 65% and 60% of the respondents experiencing tight trade conditions in December 2024 and January 2025 respectively, the 54% still facing tough conditions in February 2025 indicates a reasonable easing of trade conditions. It would appear that the actions taken by the GNU to enhance economic performance are having a positive effect on the business environment.

However, the trade outlook for the six months ahead moderated slightly from December 2024 to February 2025. Whereas 75% of the respondents were positive in December 2024, only 56% had a positive outlook in February 2025. The moderation of expectations most probably reflects the reality that although the reset of the economy is on the agenda of the GNU, the restoration process is not a quick fix.

Most of the components of trade activity improved in February 2025. Notably, the sales volumes sub-index increased from 41 in January 2025 to 47 in February 2025 – see Infogram. Other trade components like new orders, supplier deliveries, inventory levels, and sales prices all improved in February 2025, although still in negative territory (sub-indices below 50). Rising input costs and delivering on orders impacted negatively on trade conditions in February.

Except for an expected improvement in sales volumes, the six-month outlook for all the other trade components dipped. Although the setbacks were moderate, the expected higher sales prices and input costs in particular are of concern. 94% of the respondents anticipate input costs to increase in the next six months, with 86% seeing rising sales prices. This does not bode well for inflationary expectations and easier financial circumstances.

Recently released GDP data for the wholesale and retail trade, hotels, and restaurants sector showed a decline of 1.4% y/y in output in 2024. However, the y/y decrease of output in the first three quarters of 2024 was replaced by an increase of 1.6% y/y in the 4th quarter of 2024. More specific trade activities like new vehicle sales (+7% y/y), retail sales (+3% y/y), merchandise import volumes (+10% y/y), number of tourists (+8%), and real value of building plans (+8% y/y) all point towards positive trade developments. 

Merchandise export volumes (-5% y/y) are a major trade activity which recently declined. With an import propensity of 31% of domestic expenditure and exports at 32% of local output, the importance of international trade and its linkages in the South African economy play a pivotal role.

Regardless of the better trade conditions in February 2025, only 33% of the respondents employed more staff, while 44% intend to employ more people in the next six months despite a trade outlook that is anticipated to weaken.

Issued by SACCI