A South African one rand coin sits on South African rand banknotes in this arranged photograph in Pretoria, South Africa, on Wednesday, Aug. 14, 2019. The rand ended a tumultuous week on a positive note, gaining against the dollar for a second day and heading for its first weekly advance in four as technical indicators suggested recent declines are overdone. Photographer: Waldo Swiegers/Bloomberg via Getty Images

JOHANNESBURG, Aug 2 (Reuters) – The South African rand was stronger in early trade on Friday, helped by signs of improvement in the domestic economy and dollar weakness on global markets.

The rand traded at 18.2275 against the dollar at 0635 GMT, up about 0.3% from Thursday’s close.

The dollar was down about 0.1% against a basket of currencies after an unexpected slump in U.S. manufacturing raised fears of an economic downturn.

South African data on Thursday showed electricity generation increased 5.4% year on year in June. A purchasing managers’ index survey for the manufacturing sector, meanwhile, showed a sharp rebound in July.

“Structural improvements in the South African economy should continue to support the rand,” Commerzbank analyst Volkmar Baur said in a research note.

Later on Friday South Africa’s government will auction 1 billion rand ($54.9 million) of inflation-linked bonds.

($1 = 18.2188 rand)

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(Reporting by Alexander Winning; Editing by David Goodman)