NAIROBI, Kenya, Feb 6 – Kenya’s private sector grew marginally in the month of January with business activities growing at the weakest rate in seven months.
According to Stanbic Bank’s Purchasing Managers’ Index, the growth was supported by new orders increase, which although slower, were at a sharp rate.
The seasonally adjusted Purchasing Managers’ Index, at 52.0, was however consistent with a modest improvement in the health of the private sector at the start of the year.
The bank however stated that there are signs of distress within the sector following the capping of banks interests rates as noted by lamentations about cash shortages.
Stanbic’s Regional Economist Jibran Qureishi, says a further slowdown in credit growth and poor weather conditions will most likely lead to a downward trend in the PMI over the coming quarter.
Meanwhile, firms have raised their payroll numbers slightly while there were signs of ongoing pressure on operating capacity.
Output increased at a modest pace that was the weakest since mid-2016. On the price front, charges rose for the fourth successive month amid a further increase in input costs.
Firms also raised their staffing levels in January, but at the weakest rate in six months. Concurrently, capacity pressures continued to build, with backlogs accumulating for the fifteenth successive month.
A number of companies indicated that greater workload was the primary factor behind the latest increase in outstanding business.
At the same time, the month saw a sharp albeit softer rise in new business.
“A number of firms mentioned that promotional activities had boosted demand. Another factor supporting growth of total new orders was a robust expansion in new business from abroad,” Stanbic Bank says in a statement.
As far as prices are concerned, higher raw material costs were reported to be the primary factor behind another steep increase in overall input costs, with wage inflation softening in January. Average prices charged rose for the fourth month running.