TRADING conditions remained strained in January amid muted demand and the outlook remains uncertain, a South African Chamber of Commerce and Industry (Sacci) index showed on Thursday.

Businesses expect sales and new orders to decline over the next six months and also forecast input prices to continue rising.

"The present drought conditions and the weak rand will contribute to higher prices in the next six months," Sacci said.

Sacci’s seasonally adjusted trade activity index remained unchanged at 39 points in January — 20 index points below the index level recorded in January last year.

Weak trade conditions suggest low household spending, which does not meaningfully support economic growth.

Sales volumes, new orders and supplier deliveries improved in January but were offset by a sharp decline in employment and a significant increase in input costs.

The outlook for trade over the next six months remained uncertain and implied "elusive expectations" for the first half of this year, Sacci said in a statement.

The seasonally adjusted trade expectations index was little changed in negative territory at 41 in January from 42 in December.

The employment situation in the trade sector worsened and is not expected to improve. The subindex on employment prospects for the next six months remained in negative territory at 47.