South Africa’s rand found a quiet footing in early trading on Tuesday, exhibiting stability as local investors braced themselves for the release of crucial economic indicators: the purchasing managers’ index (PMI) survey for the manufacturing sector and fresh vehicle sales data.
At 0557 GMT, the rand was trading at 17.69 against the dollar, hovering just a whisker away from its closing rate on Monday.
The closely watched Absa PMI for June is slated for release at 0900 GMT. This survey promises to shed valuable light on the health and conditions of the manufacturing sector, which is the backbone of Africa’s most industrialised economy. Investec economist Lara Hodes, in a recent research note, shared her expectation that the manufacturing index would likely “have remained in contractionary territory in June.”
She attributed this anticipated stagnation to “a lacklustre domestic economy which continues to face a number of structural challenges, while globally manufacturing conditions remain subdued weighing on export potential.”
Local investors will then shift their attention to the vehicle sales data for June, expected around 1200 GMT. This figure will offer a timely snapshot of consumer demand, particularly for significant purchases like cars. Economists at Nedbank are forecasting an annual growth in car sales, largely driven by last year’s low comparative base, coupled with easing financial conditions stemming from recent interest rate cuts, lower debt service costs, and generally subdued prices.
Meanwhile, the dollar itself remained largely flat against a basket of international currencies. This pause in its movement is attributed to heightened uncertainty surrounding U.S. President Donald Trump’s tariff policies, as a July 9 deadline looms large. Tariff rates ranging from 10% to 50%, originally announced on April 2, are poised to take effect next week following a a 90-day pause implemented by Trump, unless new bilateral trade deals are successfully reached.
In the bond market, South Africa’s benchmark 2035 government bond showed a slight improvement in early deals, with its yield gently falling 3 basis points to 9.935%.
