SA's GDP is down in the dumps

Factory output suffered a sharp decline in June, judging by the Absa purchasing managers index, which showed a shock 4.8-point drop to 46.7 points.

Absa said: "Several domestic data releases, such as the economy having entered a technical recession and business confidence plunging to recession-low levels, as well as continued uncertainty on the political front likely explain why respondents were notably more pessimistic."

Absa warned that the manufacturing sector was bracing itself for a possible strike in the steel and engineering sectors.

The index tracking expected business conditions in six months' time to fall to the lowest level since February 2016, from 61.4 in May to 50.0 in June. The purchasing price index declined by seven points to reach 61.3 index points in June.

The June figure does not bode well for second-quarter GDP growth. The rand was weaker in response to the data, at R13.181/$ in afternoon trade, from R13.0733/$.

The currency was also under pressure from a firmer dollar and lower commodity prices.

Happenings at the ANC policy conference also kept the rand on the back foot and rising yields in the global bond market had added to the pressure on the rand.