Rand firms against dol­lar as man­u­fac­tur­ing data sur­prises to the up­side

Swazi Observer - - BUSINESS -

JO­HAN­NES­BURG - The rand was stronger yes­ter­day af­ter­noon as bet­terthan-ex­pected man­u­fac­tur­ing data buoyed sen­ti­ment in the forex mar­ket, in a flat euro en­vi­ron­ment.

SA’s man­u­fac­tur­ing out­put grew 2.3 per cent in May from the same month in 2017. On a monthly ba­sis, the sec­tor grew 1.5 per cent, af­ter de­clin­ing by a re­vised 0.5 per cent in April 2018. The mar­ket was ex­pect­ing pro­duc­tion to rise by a modest 0.4 per cent month on month.

How­ever, min­ing pro­duc­tion con­tin­ued its down­ward tra­jec­tory in May, con­tract­ing 2.6 per cent year on year, its third con­sec­u­tive month of falls. How­ever the rate of con­trac­tion did slow, af­ter a 4.4 per cent fall in April.

Cou­pled to­gether, yes­ter­day’s fig­ures sug­gest that the con­trac­tion in SA’s econ­omy slowed in the mid­dle of the sec­ond quar­ter, Cap­i­tal Eco­nomics an­a­lysts said. “Even so, GDP prob­a­bly con­tin­ued to fall.”

The fo­cus now turns to re­tail sales for May, which are due next week. A sub­dued num­ber will raise the pos­si­bil­ity of an­other neg­a­tive quar­ter, tech­ni­cally plac­ing the coun­try into re­ces­sion, fol­low­ing the con­trac­tion in GDP of 2.2 per cent in the first quar­ter.

“How­ever. we re­main op­ti­mistic that SA can achieve pos­i­tive GDP growth in the sec­ond quar­ter, al­beit only frac­tional,” Stan­lib econ­o­mist Kevin Lings said.

The dol­lar was lit­tle moved af­ter the in­fla­tion rate in the US edged up to 2.9 per cent in June from 2.8 per cent in May, match­ing mar­ket ex­pec­ta­tions. It is the high­est rate since Fe­bru­ary 2012.

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