Cape Town - The rand declined, retreating from a two-week high against the dollar as slower growth in retail sales raised concern that consumer demand may be easing in Africa’s biggest economy.

The country’s benchmark bond gained.

Retail sales growth slowed to 3.5 percent in December from a revised 4.4 percent the month before.

While outpacing the 2.8 percent median estimate of 12 economists in a Bloomberg survey, the data added to evidence that the economy is struggling to gather momentum.

Consumer spending accounts for 60 percent of South Africa’s economy, according to government data.

“High consumer debt levels, slowing credit growth momentum and weak consumer confidence in the quarter underpin the ongoing slowdown observed in key consumption-led sectors of the economy,” Jeffrey Schultz, an economist at BNP Paribas Cadiz Securities in Johannesburg, said in a note to clients.

The unexpected central bank interest-rate increase in January “will only add to the pain already being felt by consumers,” he said.

The currency weakened 0.3 percent to 10.9952 per dollar by 3:35 p.m. in Johannesburg.

Yields on benchmark bonds due December 2026 fell three basis points, or 0.03 percentage point, to 8.73 percent.

Earlier, the rand strengthened as much as 0.3 percent to 10.9295 per dollar, the strongest intraday level since January 29, as emerging markets were bolstered by better-than-estimated Chinese trade data that eased concern of slowing growth in the world’s second-biggest economy.


Mining Production


Exports from China, the biggest buyer of South African raw materials, jumped 10.6 percent in January, beating the 0.1 percent median estimate in a Bloomberg survey.

Imports gained 10 percent and the trade surplus widened.

The rand’s gains “occurred into favourable signals in China’s trade data for January, which likely eased heightened concerns about the country’s growth performance,” Bruce Donald, a currency strategist at Standard Bank Group Ltd. in Johannesburg, said in a note to clients.

Growth in Chinese imports “appears particularly encouraging” for commodity exporters such as South Africa, he said.

China buys about 11 percent of South African exports, according to government data.

Figures on the nation’s mining output for December will be released tomorrow, with production slowing to 4.6 percent from 5.1 percent a month earlier, according to the median estimate of six analysts surveyed by Bloomberg.

Foreign investors bought a net 808 million rand ($74 million) of South African bonds yesterday, according to JSE Ltd. data. - Bloomberg News