TRADE conditions in South Africa weakened sharply last month, reinforcing fears of the effect on the economy of a slowdown in domestic and global demand.

A seasonally adjusted trade activity index compiled by the South African Chamber of Commerce and Industry (Sacci) fell seven points to 49 last month.

The index suggests there could have been further pressure on retail sales in the past two months, after a meagre 1% increase during April, according to the latest official data. Figures for May are due on Wednesday.

Indices for sales and new orders both declined to 51 last month, from 64 and 58, respectively, in May, Sacci said. Input and sales prices also declined during the month.

Trade expectations may improve in six months' time, as Sacci's trade expectations index rose to 61 from 57 in May.

"However, expected tight economic conditions and low business confidence will continue to weigh on trade conditions in the coming months," the chamber said in a statement.

The employment index nudged up to 50 from 49, but Sacci warned that the likelihood of improved levels of employment remained low.

The business group's trade indices cover wholesale and retail sales, as well as exports.

isam@bdfm.co.za