The business confidence index (BCI), which is produced by the South African Chamber of Commerce and Industry (Sacci), showed business confidence fell from 95.1 points in January to 93.4points last month - the lowest reading since September. This was a result of load shedding in the month and wary investor sentiment ahead of the national elections later in the year.
The BCI was also 5.5points below the February 2018 BCI level of 98.9points when Cyril Ramaphosa replaced Jacob Zuma as head of state.
The last time the index breached the 100points was in October 2015 - in the lead up to Nenegate.
The index reached an all-time high of 141.17 points in December of 2006.
Sacci economist Richard Downing said public sector activities and events like Sona and the Budget were important for setting the mood in the economy on a course for growth and promoting a positive investor outlook.
“The economy is emerging from a difficult period that affected business confidence, policy uncertainty and performance,” Downing said.
“It has led to a substantial increase in unemployment levels. It is against this background, that the present economic performance, the Sona, the Budget, and business confidence should be appraised.”
The Budget indicated downward growth revisions driven by sluggish business sentiment.
This was as the National Treasury pledged to support Eskom to the tune of R150billion in the next decade.
The power utility last month struggled to power the economy - at one stage the utility withheld 4000 megawatts of demand off the national grid.
Eskom’s request for it to be granted a tariff increase of more than 45percent over the next three years was also expected to add pressure to sentiment.
The National Energy Regulator (Nersa) is expected to announce the country’s new electricity tariff today.
Jee-A van der Linde, an economist at NKC African Economics, said: “Nersa has traditionally declined to offer the power utility’s its full tariff requests - if accepted, tariff increases are set to average 16percent annually over the next three years. Businesses have criticised the proposed increases.”
Sacci also flagged geopolitical concerns which are contributing to the nervousness in the current climate.
However, the chamber said the main positive month-on-month effects on the BCI were increased merchandise export volumes, higher share prices on the JSE, and more real credit extended to the private sector.
Dave Mohr and Izak Odendaal from Old Mutual Multi-Managers said in a note that local equities followed global markets higher in February.
“The FTSE/JSE All Share Index returned 3.4percent in February and 6.3percent so far in 2019,” they said.