The rate of job losses in the private sector increased in the month of November, due to weaker output and reduced workloads, the November Kenyan Purchasing Managers Index (PMI) shows.
- The monthly data by Stanbic Bank Kenya pointed to a reduction in workforce numbers at Kenyan firms for the third month in a row, which panellists largely related to weaker sales and a corresponding drop in workloads.
- The degree of job shedding was the greatest recorded in the series near-decade history when excluding the initial COVID-19 lockdown in 2020.
- Job levels fell in agriculture, mining, manufacturing, construction, wholesale, retail and services sectors
“The Kenyan Purchasing Managers Index (PMI) deteriorated further in November, reflecting still difficult business conditions for the private sector. Besides the agricultural sector, output and new orders declined across all monitored sectors; the construction sector was the worst hit,” said Christopher Legilisho, Economist at Standard Bank.
“Inflationary pressures and cashflow difficulties saw customer spending declining, rising input prices and purchase price pressures are being attributed to further increases in fuel prices, electricity costs and taxes among other factors,” he said.
According to the survey, exporters continued to perform strongly, helping to offset weak domestic output, as demand from Europe and Asia was greater. Still, the business outlook for the next 12 months is quite weak based on the survey results from respondents.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
At 45.8, dropping from 46.2 in October, the headline index pointed to a sharp decline in the performance of the Kenyan private sector in November. The reading marked the third contraction in as many months, and was among the weakest seen in the index’s near decade-long history.
- Driving the downturn in operating conditions was another historic increase in business costs during November.
- After reaching the highest level in the series history one month ago, the rate of input cost inflation remained marked and was the second-fastest on record, with firms largely relating this to a further depreciation in the shilling against the US dollar, higher taxes and greater fuel charges.
- The business expectations for the coming year were subdued and dropped slightly to a four-month low.
In total, just 17 per cent of companies were confident of growth, linked to expansion plans and the launching of new products and services.