In a recent Trade Conditions Survey released by the South African Chamber of Commerce and Industry (SACCI) on Thursday, evidence of improving trade conditions has emerged for February 2025.

This marked the first significant signs of recovery since mid-2024, notably following the establishment of the Government of National Unity (GNU) in June 2024.

SACCI detailed that, while 65% of respondents reported tight trade conditions in December 2024, and 60% experienced similar challenges in January, the figures have shifted positively in February.

With only 54% still grappling with tough conditions, the survey suggests a reasonable easing has occurred, sparking optimism that the GNU's strategies aimed at enhancing economic performance are beginning to bear fruit.

Despite this positive shift, the survey indicates a moderation in the outlook for the next six months. While 75% of respondents expressed a positive sentiment in December, only 56% maintained that view in February.

This tempered optimism may reflect a broader understanding that while the economy is on a path to recovery, there are no quick fixes in sight. Analysts have noted a cautious approach, as ongoing economic restoration requires time.

Furthermore, a closer look into the trade activity highlights that most components saw improvement in February 2025. The sales volumes sub-index notably rose from 41 in January to 47 in February.

However, other metrics such as new orders, supplier deliveries, inventory levels, and sales prices, while also showing improvements, remained in negative territory as they all reported sub-indices below 50. Factors such as rising input costs continued to weigh heavily on trade conditions.

A concerning 94% of respondents expect input costs to rise over the upcoming six months, with 86% predicting increases in sales prices. This pattern raises alarm bells regarding inflationary pressures and the overall financial landscape in the country.

Recent economic data reveal a mixed picture. While the overall GDP for the wholesale and retail trade, hotels, and restaurants sector recorded a decline of 1.4% year-on-year for 2024, positive growth of 1.6% was documented in the fourth quarter.

More encouragingly, specific activities like new vehicle sales rose by 7% and retail sales by 3%, highlighting areas of potential growth within the beleaguered economy.

However, the decline of 5% year-on-year in merchandise export volumes, along with global dependencies, highlights the complexities facing South Africa's economy, driven by a significant import propensity of 31% of domestic expenditure.

Intriguingly, the survey unveiled that, despite improved trade conditions in February, only 33% of respondents had increased their workforce, while 44% signalled intentions to hire within the next six months—a paradox in light of an anticipated weaker trade outlook.

Waldo Krugell, an economics professor at North-West University said that the survey indicated mixed responses.

“They say trade conditions eased, but 54% of respondents still said they face tough conditions and there was a fall from 75% to 56% of respondents that had a positive outlook. I am worried that these high-frequency indicators are showing that the economy is not picking up as economists had hoped," she said.

Krugell added that the Purchasing Managers’ Index have been weak and the Bureau for Economic Research's recent business confidence index stayed unchanged but was actually a lot weaker if you take out new car sales.

“We have also seen January Mining and Manufacturing output contracting. I think that business and financial investors are waiting for positive GNU reforms to translate into some real action.”

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