Kenya’s private sector activity picked up momentum in May after months of slow growth. The Stanbic Bank Kenya Purchasing Managers Index (PMI), which measures the level of business activity in the private sector, increased to 52.5 in May from 41.5 in April. The May PMI reading is the highest in four months.
A reading above 50.0 indicates improvement in business conditions, while a reading below 50.0 signals contraction.
According to the Stanbic Bank survey, the level of output from Kenyan businesses improved in May, offsetting a severe decline in activity in April. Sectors such as Agriculture, Services sector, and Wholesale and retail recorded significant progress in the rate of output growth.
In the period under review, firms in the Agriculture sector, Services sector, and wholesale and retail space indicated a sharp rise in demand for their products. But companies in the manufacturing and construction industry recorded a decline in demand.
Businesses expanded their workforce as the demand for goods and services increased in May. “Employment rose across most of the monitored sectors in the latest period, but fell in agriculture and was broadly unchanged in wholesale & retail,” noted the Stanbic report.
9% of the businesses surveyed by Stanbic Bank posted an increase in prices mainly due to the high price of fuel in the country. Only 1% of companies indicated a decline in prices.
Businesses signalled optimism for the first time since January this year with a rise in the Future Output Index. Stanbic bank noted in its PMI report, “Optimism was largely based on business expansion plans, including new branch openings, increased marketing and opportunities to move into foreign markets”.