Kenya’s private sector activity improved in June, although at a modest pace, according to the latest Stanbic Bank Kenya Purchasing Managers Index (PMI). The improved activity was supported by increased output from the manufacturing, construction, and agriculture sectors as well as a jump in new orders.
The Purchasing Managers Index, which measures economic activity, posted a reading of 51.0 in June, a slight dip from 52.5 in May. A reading above 50 points signals growth in business activity while a reading below 50 points to contraction. The June PMI reading was the second consecutive monthly improvement in the health of the Kenyan private sector.
Data collected from the Stanbic Bank survey showed that output at Kenyan companies continued to rise at the end of the second quarter, mainly driven by increased demand by customers and greater cash flow. International sales also increased in June as the demand from European clients intensified.
Companies increased their input purchases in anticipation of higher new order inflows. Similarly, more businesses expanded their workforce in June as the demand for goods and services rose.
According to the Stanbic survey, the price of goods jumped up in June due to high fuel costs and increased demand for raw materials. Staff costs also went up for the second month running. These factors led businesses to raise their selling charges in a bid to sustain profit margins.
The survey showed that most Kenyan businesses have a bleak outlook about the future partly due to concerns that Covid-19 restrictions could harm economic activity.
