NAIROBI, Kenya Sept 4 – Kenya’s private sector activity improved last month for the first time since May due to the cooling of the recent anti government protests.
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) Report indicates a mild recovery in business conditions during August as the impact of protests faded, allowing firms to broadly resume normal operations.
The PMI rose from 43.1 previously recorded in July to 50.6 in August, posting above the 50 no-change mark for the first time since May, when the sector’s activity increased.
PMI reading below 50 indicates a downtick and deterioration in business activities, while the figure above shows growth and improvement.
“Kenyan businesses raised their output levels for the first time in three months in August. The rate of growth was moderate and the second quickest in over a year-and-a-half,” Stanbic stated.
“The reading thereby signaled a renewed improvement in business conditions in the Kenyan private sector however, the pace of expansion was only marginal.”
The PMI report noted that activity levels rose for the first time since May, with new orders also picking up, albeit marginally.
The Bank stated that firms also increased their purchases of inputs, while employment fell for the first time so far this year.
“New orders placed at Kenyan businesses also picked up in August, although the uplift was only slight. Some firms continued to highlight weak spending power at customers. However, firms did raise their purchases of inputs, which was the first expansion in three months,” the report concluded.
According to survey respondents, cost pressures on businesses across the private sector intensified in August due to rises in import fees and tax burdens.
“Business expectations worsened in August, implying firms as less hopeful about output over the next 12 months. Only 5 percent of the survey panels were confident that output levels will increase over the next 12 months,” said Christopher Legilisho, economist at Standard Bank.
