Kenya’s private sector growth picked up slightly in August, supported by stronger job creation and a sharp rise in input stocks according to the latest Purchasing Managers’ Index™ (PMI™) data released by CfC Stanbic Bank and market research firm, IHS Markit.
With output and new orders also growing solidly, business conditions continued to improve. That said, the degree of improvement remained historically subdued. On the price front, muted cost pressures led to a weaker increase in charges.
The seasonally adjusted PMI inched higher in August, posting 53.5 compared to 53.3 in July. The latest reading pointed to sustained steady growth of the private sector, following a marked slowdown at the end of the second quarter. However, while above June’s record low (51.5), the index remained weaker than the series average (54.8).
Related; Kenya’s July private sector growth rebounds to hit 53.3%
Commenting on August’s survey findings, Jibran Qureishi, Regional Economist E.A at CfC Stanbic Bank said: “The private sector PMI continued to recover after falling to a survey record low of 51.5 in June. New orders from abroad supported business as exports rose at the fastest pace since May. Subdued costs for the remainder of the year should assist firms in boosting production and subsequently support output; however this benign outlook on costs could alter if the currency faces volatility via portfolio outflows following the recent amendment to the banking bill. Nonethless, high profile conferences like the recently concluded TICAD are evidently underpinning an impressive recovery in the tourism sector.”
After having eased to a series low in June, output growth was maintained close to July’s solid pace in August. New orders rose markedly, albeit at a slightly reduced rate compared to July. Helping to support growth of total new work was a renewed expansion of new business from abroad. Exports increased at the steepest pace since May, following a stagnation one month previously.
“While higher output and new orders both contributed to the above-50.0 PMI reading, a key driver of overall growth was a sharp rise in input stocks. The rate of inventory building accelerated to the second-quickest since data collection started in January 2014. Improving demand was cited as the main reason for higher stocks. Purchasing activity also rose solidly in the latest period,” Mr. Qureishi explained.
According to the survey, the rate of job creation rebounded in August, having slowed to near-stagnation at the start of the third quarter. However, hiring remained only modest overall. Subsequently, backlogs of work continued to accumulate in line with stronger order books.
Price pressures in Kenya’s private sector meanwhile eased in August. Total input costs rose at a slower pace than in July, with the latest increase also muted in the context of historical data. Charges showed a similar trend.
