Rands. Picture: THINKSTOCK
Rands. Picture: THINKSTOCK

The rand was stronger on Thursday afternoon as better-than-expected manufacturing data buoyed sentiment in the forex market, in a flat euro environment.

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

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

Coupled together, today’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% 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% in June from 2.8% in May, matching market expectations. It is the highest rate since February 2012.

The core consumer price index, which excludes volatile food and energy prices, also ticked up, to 2.3% from 2.2%, putting it at an 18-month high.

At 2.3%, core inflation is now above the US Federal Reserve’s 2% target, although consumer inflation is not the Fed’s preferred measure of inflation.

At 3pm the rand was at R13.3983 to the dollar from R13.5659, up 1.24%. It was at R15.6375 to the euro from R15.8371 and at R17.7169 to the pound from R17.9017.

The euro was at $1.1672 from $1.1676.

Local bonds were marginally weaker with the R186 bid at 8.74% from 8.71% and the R207 at 7.465% from 7.43%.

The US 10-year treasury was at 2.8588% from 2.8469%.