South Africa's rand under pressure before production data

New South African bank notes featuring an image of former South African President Nelson Mandela are displayed at an office in Johannesburg January 17, 2013. REUTERS/Siphiwe Sibeko·Reuters· (Reuters)

JOHANNESBURG (Reuters) - South Africa's rand weakened towards a seven-month low against the dollar on Thursday ahead of output data expected to show the economy's key sectors are not growing. Investors are bracing for mining and manufacturing numbers, with both sectors forecast to have contracted in July as the effects of strikes and production stoppages hit output. Mining is a big foreign exchange earner in South Africa, while manufacturing is the second biggest sector of the economy. Both industries are in recession and dragged the whole economy to a 0.6 percent contraction in the first quarter of the year. GDP managed a 0.6 percent expansion in the second quarter, effectively putting growth at zero in the first half of the year. At 0621 GMT, the rand was down over 0.3 percent at 10.9625 to the dollar. It breached the 11 mark to hit a seven month low in the previous session but is due for a breather after that sharp fall on Wednesday, dealers said. However worse-than-expected data may encourage rand bears. Economists are forecasting a sharp fall of 5.65 percent in manufacturing in July, from a 0.5 percent expansion previously. Mining is expected to contract 6.35 percent from -5.7 percent. Yields on government bonds nudged down two basis points to 8.165 percent on the benchmark 2026 issue in Thursday's early trade.

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