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Kenya

Kenya’s Business Growth Resurges Supported by Re-opening of Economy

NAIROBI, Kenya, Oct 5 – Kenya’s private sector output registered strong growth in September, the highest for nearly two and a half years, according to Stanbic Bank’s PMI report.

The bank’s closely watched PMI Index rose to 56.3 from 53.0 posted in August, marking the third successive expansion since the downturn caused by the COVID-29 outbreak.

Head of Africa Research at Stanbic Bank Jibran Qureishi largely attributed the improvement in performance to the lifting of some domestic COVID-19 containment measures.

The researcher added that the lifting of the measures should gradually continue to support activity at the end of the year.

“This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave globally that could dampen external demand again,” Qureishi said.

The data provider said firms saw a release of pent-up demand as clients largely returned to markets during the month.

New orders grew for the third month running, helped by a further increase in foreign orders, particularly from Europe and the Middle East.

Notably, the rise in total sales was the strongest since January 2016.

Subsequently, output levels expanded at a sharp pace in the latest survey period, with companies also steeply increasing the volume of inputs purchased.

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Suppliers were able to deliver more quickly for the fourth month in a row, although the rate of improvement was hampered by traffic issues and the short supply of some products.

Rising demand led to a solid uptick in backlogs of work during September, which led some firms to hire new workers.

This counteracted job cuts at other firms, amid efforts to reduce expenses. As such, employment was broadly level during the month, following a six-month run of decline.

Input cost inflation softened in September but remained solid overall as firms cited price rises for fuel and commodities, in addition to higher logistics costs.

Firms often passed these costs onto customers, as output charges rose for the third month in a row.

Despite stronger growth, companies were less confident about the 12-month outlook in September.

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