In April 2020, the strict lockdown regulations owing to Covid-19 took effect and outpaced the recessionary economic conditions, the South African Chamber of Commerce and Industry (SACCI).
“Trade conditions were badly affected and called for extra-ordinary efforts by businesses to keep afloat,” described SACCI CEO, Alan Mukoki.
“The seasonally adjusted Trade Activity Index (TAI) declined by 11 points to 26 in April 2020 while the seasonally adjusted Trade Expectations Index (TEI) dropped by 10 index points to 31 – well beyond recessionary conditions.
“On an annualised basis, the TAI declined by 12 index points between April 2019 and April 2020 while the six-month expectations index (TEI) decreased by 10 points over the year to April 2020. “
Mukoki said that sales volumes and new orders plunged as 78% and 76% of the respondents respectively experienced adverse conditions in these important trade elements.
“The adverse effect on new vehicle sales in April (98% m/m decline) is an example of the notable impact the lockdown had on ‘non-essential’ trade,” he added.
“Supplier deliveries (minus 12 points) and inventories (minus 9 points) pointed towards the effect on stock and supplies breakdown.
“Trade expectations for the next six months also plummeted by 10 index points as expectations for sales and new orders both contacted substantially.”
Mukoki said that supplier deliveries and inventories are also foreseen to deteriorate notably over the next six months.
“Both sales and input prices are expected to be under pressure but to remain above the 50 index mark.
“Respondents from the property and rental market experience requests for payment and levy holidays while there is an increasing number of residential rental payment defaulters,” he added.
“Due to the lockdown, certain businesses and food processors have been closing owing to fixed overheads but with a rapid dwindling income. Respondents call for an end to the lockdown as they cannot afford to continue.
“Respondents accept a calculated but balanced risk to unlock the economy.
“Although employment held up reasonably in March, employment decreased notably in April by the sub-index declining by 9 index points to 32 while employment opportunities for the next six months remains bleak as the sub-index declined by 8 points to 33.”