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Survey Notes Continued Improvement of Business Conditions in Kenya

NAIROBI, Kenya, Jul 4 -Business conditions in Kenya’s private sector continue to improve for a second month in a row.

This is according to Stanbic Bank’s Purchasing Managers’ Index (PMI) which says improvement in June was supported by further rises in output and new orders.

According to the survey, a sustained upturn in new orders provided fresh capacity pressures, leading to the first
increase in outstanding work in four months.

Firms subsequently added to their workforce numbers, although the rate of job creation slowed from the previous month and was marginal.

Purchasing of inputs also expanded during June, with firms often reporting efforts to build inventories in anticipation of higher new order inflows.

Meanwhile, suppliers’ delivery times were shortened to the greatest extents since last October.

Hiring activity also continued as firms faced a renewed increase in backlogs, while there were additional efforts to build inventories ahead of predicted sales growth.

However, concerns about further COVID-19 restrictions meant that the business outlook slipped to the second-weakest in the series history.

It is against this backdrop that the headline PMI fell from 52.5 in May to 51 in June, indicating a sustained, but weaker, expansion in the Kenyan private sector economy.

Commenting on the survey findings, Kuria Kamau from Stanbic Bank said the surveyed firms’ outlook for the economy over the next year worsened after more stringent public health restrictions were imposed on 13 counties.

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“The pace of the recovery slowed in June following the strong improvement witnessed in May when some of the stringent public health restrictions were lifted. Both domestic and export demand increased on account of higher customer numbers and increased cash circulation; but the increase was at a slower rate than in May. To meet the rising demand, firms increased their purchases, staff costs and output but at a slower rate than demand which resulted in an increase in work backlogs,” he said.

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