Rand surrenders gains overnight, Newsline

Compiled by Dhivana Rajgopaul

JOHANNESBURG – The South African rand oscillated in a narrow band yesterday as traders digested mixed data releases on the domestic front according to NKC Research.

New car sales dipped for an eighth-consecutive month in September, while the seasonally-adjusted PMI released by Absa showed further recovery last month, albeit from a low base. Meanwhile, the US dollar was little changed following a choppy trading session as traders prepared for today’s US non-farm payroll release.

At the close of local trade, the rand quoted 0.20 percent weaker at R16.65/$, after trading in range of R16.55/$ – R16.76/$. The rand surrendered gains overnight. Expected range today R16.50/$ – R16.90/$.

Latest PMI reading suggests strong recovery in Q3

The Absa purchasing managers’ index (PMI) rose from 57.3 points in August to 58.3 points in September, showing that the recovery in the manufacturing sector continues to gain traction. While easing somewhat, the business activity index came in at a robust 63.8 points.

After averaging 37.6 points in 2020 Q2, the latter index averaged 64.4 points in Q3, indicative of a strong pick-up in output. The new sales orders component recorded a robust 70.5 points reading in September, with strong domestic demand only partly offset by a softening in export demand. The inventories index breached the 50-point threshold in September and, at 51.8 points, reached the highest level in over four years. In turn, the suppliers’ deliveries index, which has been distorted somewhat by supply-chain disruptions, eased to 60.9 points – the lowest reading since February.

The employment index remained the blemish on a largely positive PMI release, although the rate of job losses continues to ease. The latter index rose from 39.0 in August to 44.5 in September. On a more positive note, most purchasing managers remain optimistic about business conditions going forward. The index tracking expected business conditions in six months’ time ticked up from 63.4 in August to 64.5 in September.

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