High import and export volumes have contributed to the South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) rising by 3.5 index points 92.8 in February, from 89.3 in January.

Sacci noted that the increase was surprising, pointing out that it followed on a one-point increase in January.

Two subindices – the exchange rate of the rand weighted against the pound, dollar and euro and the volume of private sector borrowing – had made positive year-on-year contributions to the BCI in February.

“Rather than broad-based, the marked increase of the BCI can be ascribed to more specific developments. Whether an increase in business confidence will generally be supported by economic and business conditions in 2015 is still uncertain,” Sacci said in a statement.

Meanwhile, the chamber noted that, although the month-on-month changes in export and import volumes were negative in February, it remained at relatively high levels.

Five of the 13 subindices made negative month-on-month contributions in February. Of the six financial subindices, only the precious metals subindex made a negative contribution month-on-month.

Further, eight of the 13 subindices made negative year-on-year contributions to the BCI. Four of the six financial subindices were below the February 2014 levels and put the BCI under pressure.

“Public finance has been jolted into a problematic stalemate that makes it tough to alter if economic conditions necessitate change. It is apparent from the [national budget] that there is still a strong bias towards social spending. The social spending imperative is one of the reasons for an inflexible budget. Rising public sector debt is cause for concern, the chamber said

It further noted that Finance Minister Nhlanhla Nene’s budget [speech] did not do much to quell the concerns of business about the direction in which the economy is moving. “There is a sense that government still sees itself as the main vehicle to propel the economy to a better performance. The standoff in business confidence will continue until the private sector sense a changing business climate,” it added.

Meanwhile, Sacci stated that lower inflation provided much and timely relief to the consumer and some parastatals such as Eskom and South African Airway. “Unfortunately, higher personal income tax could curtail expenditure, while the much higher fuel levy will affect all income groups.”