South African business sentiment was little changed in January, after surging to a decade-high at the end of last year, indicating that firms remain upbeat about the nation’s economic prospects and the performance of its coalition government.

A gauge of the mood among firms compiled by the South African Chamber of Commerce and Industry (Sacci) edged down to 120 from 121 in December. It averaged 112.6 last year, compared with 109.6 in 2023.

The inclusive government is “feeding expectations that a more free-enterprise and free-market economic policy environment will emanate over the medium to longer-term,” Sacci said. “Although many challenges persist, the goodwill towards South Africa in rectifying and addressing pressing problems is acknowledged.”

The indicator has surged since May elections, which saw the African National Congress lose its majority for the first time since 1994. The party then formed a governing alliance with the business-friendly Democratic Alliance and eight smaller rivals, and it has prioritised growing the economy and fixing energy and logistic bottlenecks.

Reforms at state power utility Eskom have already helped ease electricity shortages and the country has largely been speared rolling power outages since March last year.

The latest index was compiled before US President Donald Trump attacked a new South African land-expropriation law and the nation’s foreign policy, and halted all aid to the country — a stance that is likely to impact on business confidence going forward.

The January index was positively impacted by larger import volumes, new vehicle sales and an increase in tourism activity, according to Sacci.

“Improved sub-indices on economic activity had a strong positive effect on the medium-term business perceptions compared to a year ago,” the chamber said.