At 15.38 GMT, the rand traded at 17.2825 against the dollar, 0.83% weaker than its previous close.
The dollar index, which measures the currency against six rivals, rose around 0.5% after the Institute for Supply Management said its non-manufacturing PMI edged up to a reading of 56.9 last month from 56.7 in July, the second consecutive monthly increase after three months of declines.
Data from the statistics agency showed that South Africa's economy contracted back to pre-pandemic size in the second quarter, weakened by floods that disrupted operations at a key export hub and the country's worst-ever power cuts.
Gross domestic product contracted 0.7% in the second quarter in quarter-on-quarter, seasonally adjusted and non-annualised terms and grew 0.2% year-on-year unadjusted in the second three months of the year.
Analysts polled by Reuters had predicted 0.8% quarter-on-quarter contraction and 0.6% year-on-year growth.
"Following a better than anticipated Q1 outcome, supported by a pick-up in demand, with few COVID-linked restrictions in place, the second quarter disappointed as severe flooding in Kwa-Zulu Natal weighed on economic activity," Investec analyst Lara Hodes said in a research note.
On the stock market, the Top-40 and the broader all-share indexes closed around 0.2% higher.
However, shares in Shoprite Holdings slid more than 7% after South Africa's No. 1 grocer reported lower-than-expected profit and a narrower trading margin.
The government's benchmark 2030 bond was almost unchanged, with the yield at 10.520%.
(Reporting by Bhargav Acharya in Bengaluru and Anait Miridzhanian in Johannesburg; Editing by Rashmi Aich)
