Business activity in Kenya’s private sector rose sharply in January, after a modest improvement in December 2020. High output and new business pushed up private sector activity. The Stanbic Bank Kenya Purchasing Managers Index (PMI), which measures business activity, stood at 53.2 in January, the highest reading in three months, up from 51.4 in December last year.
A reading above 50 indicates improved business activity and a reading below 50 shows contraction in business activity in an economy.
January marked the seventh month of consecutive growth in the private sector since the pandemic hit businesses. Output and new orders rose sharply at the start of 2021. According to the Stanbic Bank PMI report, customers increased their spending in the first month of 2021 as cash flows improved and more businesses resumed operations.
Kenyan companies employed workers at one of the fastest rates in 12 months as the level of new work increased. Businesses increased their workforce for the fourth consecutive month.
The government’s move to reintroduce the 16% Value Added Tax led to an increase in the cost of input and as a result, most suppliers hiked their prices. A shortage of raw materials and high demand for input also contributed to the hike in the price of commodities.
Businesses expressed their optimism about the year ahead and revealed expansion plans for 2021. According to the Stanbic Bank PMI report, more than a third of the companies surveyed predicted an increase in output by January 2022.
Kenya’s Private Sector Activity Declines
Kenya Private Sector Activity Improves in December – PMI
