NAIROBI, Kenya, Jan 7 – Kenya’s private sector activities remained healthy in December last year, the latest Stanbic Bank Purchasing Managers’ Index (PMI) shows, buoyed by new orders and business activity growths.
According to the PMI, the country recorded a score of 50.6, above 50 points thresholds for improvement. A figure below 50 usually indicates contraction.
However, last month’s reading was below 50.9 in November 2024.
“The Kenyan Purchasing Managers Index (PMI) expanded further in December, albeit at a slightly weaker pace than November, reflecting the continued resilience of the private sector following a challenging year,” Christopher Legilisho, economist at Standard Bank, said.
“Positively, this is the first quarter of expansion in output since Q4:21, suggesting that the private sector is showing signs of turning around with new orders and employment also in expansionary territory,” he added.
“The improvement is attributed to increased customer sales with an improvement in purchasing power. The PMI also signals healthy growth in purchasing plans in December with a drop in inventories as firms push to clear stocks in the construction and wholesale and retail sectors.”
Despite positive sentiments, hiring by firms barely changed in December last year. Nonetheless, there was an improvement in workforce numbers in the agricultural sector.
“Kenyan businesses reported increased pass-through of purchase prices, and therefore raised their selling prices in December to protect their profit margins. Rising input and purchase price pressures are attributed to a further increase in demand for commodities and higher taxes, mainly in the agriculture and manufacturing sectors,” Legilisho stated.
“On the macroeconomic front, we end the year with relative stability, a stable exchange rate, inflation at levels last seen 17 years ago, and interest rates declining for government. On the downside, private sector confidence in the business outlook for the next 12 months is still quite weak.”
