The Stanbic Bank Purchasing Managers Index ( PMI) for Kenya increased to 56.3 in September of 2020 from 53 in August, pointing to the biggest expansion in private sector activity since April of 2018.
This is as the government relaxed pandemic restrictions.
Customer demand rose at the highest pace since January 2016, leading to a surge in backlogs.
As a result, employment numbers were stable after declining for six months in a row. Nevertheless, future expectations fell to their lowest since the series began in 2014.
The surge in demand for goods and services forced firms to employ more people ending a seven-month squeeze on jobs freeze in the private sector.
Private sector activity in Kenya rose for a third consecutive month in September as the economy recovers from the pandemic.
The increased activity in the private sector is on the back of lifting of COVID-19 restrictions by the government across July and August.
“With the government easing lockdown restrictions during the third quarter of the year, firms saw a release of pent up demand as clients largely returned to markets,” noted the index.
Customer demand rebounded strongly and at the highest pace seen since January 2016 with new orders seeing the third month of consecutive growth including foreign orders which were anchored on sales made in Europe and the Middle East.
The high level of client demand saw an uptick in the backlog of work during the month as firms struggled to meet new orders.
Firms grew their stock of inventories for a third straight month in anticipation of sustained new orders in the near term with the rate of accumulation standing at its highest since August 2019.
Output prices were nevertheless higher on a month over month basis as firms run up higher input and purchases costs.
In spite of rebounding output, firms future expectations across the next 12 months fell to their lowest ever on record since the series was set in January 2014.
According to Stanbic Bank Head of Africa Research Jibran Qureishi, this dismal expectations is due to anxiety over a second COVID-19 hit.
“The PMI indicated further improvement in business confidence and operating conditions this month thanks in large part to the lifting of some domestic COVID-19 containment measures. This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave that could dampen external demand again,” he said.
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