NAIROBI, Kenya, Feb 4 – Private sector firms in Kenya reduced new hiring in January amid rising staff costs, higher input prices and subdued demand.
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) links the slowdown in hiring to higher taxes and increasing technology costs.
The softer labour market comes after the headline PMI fell to 51.9 in January from 53.7 in December. Readings above 50 indicate an improvement in business conditions, while those below 50 signal a contraction.
“Despite slightly lower output, new orders and employment growth, January metrics were positive, confirming a sustained expansion of activity in the private sector,” said Christopher Legilisho, economist at Standard Bank.
He noted that higher input prices, purchase costs, staff expenses and output prices were largely driven by higher taxes and rising technology costs.
“However, increased competition limited firms’ ability to raise prices, which is consistent with headline inflation easing to 4.4 per cent year-on-year in January,” Legilisho added.
The report also shows that firms were able to reduce their backlogs of work during the month.
“In general, survey panellists reported having sufficient capacity to complete work on time, with some also citing a slowdown in new order growth,” the report said.
