Political instability led to another severe contraction in the Kenyan private sector during the month of October, according to the monthly report from Markit economics.
The seasonally adjusted PMI fell to a new survey-record low of 34.4 in October from 40.9 in September. This signalled the sharpest deterioration in the health of the private sector since the inception of the survey in January 2014. Moreover, the headline PMI registered below the neutral 50.0 threshold for the sixth month in succession.
“The overall downturn reflected survey-record declines in output, new orders, employment and stocks of purchases. On the price front, firms raised selling prices for the first time in six months as their ability to absorb higher input costs was restricted. The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI™). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.” The research firm said in a statement.
Commenting on October survey findings, Jibran Qureishi, Regional Economist E.A at Stanbic Bank said: “The heated political temperature has resulted in a challenging couple of months for Kenya’s private sector. Indeed, the month of October saw the PMI fall to another record low as output, new orders and employment all contracted. That being said, the recent rains should be broadly supportive of the agriculture sector and if this is combined with an end to the political impasse, then the private sector in general is likely to begin showing some much needed signs of improvement over the near to medium term.”