The rand retreated for the first time in seven days after South African manufacturing output unexpectedly contracted in February.
The currency retreated 0.1 percent to 8.9158 per dollar by 3:54 p.m. in Johannesburg, after rising as much as 0.5 percent. Yields on 10.5 percent bonds due December 2026 climbed one basis point, or 0.01 percentage point, to 7.05 percent.
Factory output declined to 2.9 percent from revised growth of 3.7 percent in January, as stagnant domestic and global growth curbed demand, offsetting the benefits of a weaker rand, Pretoria-based Statistics South Africa said on its website today. The median estimate in a Bloomberg survey of nine economists was for 2.1 percent growth. None of the economists expected a contraction. Output slipped 3.1 percent in the month.
“Economic growth continues to disappoint,” Nicky Weimar and Dennis Dykes, economists at Nedbank Group Ltd. in Johannesburg, wrote in an e-mailed note after the manufacturing report. The Monetary Policy Committee is expected to leave interest rates unchanged until the second half of 2014, the economists said.
A recession in Europe, which accounts for a fifth of South African exports, and local labor unrest have curbed growth and undermined consumer confidence in South Africa. The Reserve Bank and National Treasury expect the economy to expand 2.7 percent this year, less than the 7 percent the government is targeting to address a 24.9 percent unemployment rate. Manufacturing makes up about 15 percent of South Africa’s gross domestic product.