Kenya’s Purchasing Managers Index (PMI) fell to 53 in August 2020 from 54.2 in July. The slow down was triggered by many firms, affected by the pandemic, scaling down or laying off workers. The net effect of households with no steady income is a low demand for goods and services.
However, the August reading indicates a second straight month of growth in the Kenyan private sector, with output and new orders rising as the economy gradually opens up.
While exports volumes grew at a record rate, employment figures fell amid efforts to cut wage costs. Although business sentiments improved for the first time since February 2020, they are still relatively weak.
” The employment index still remains below the 50 level, largely reflecting firms scaling back on wage costs,” said Jibran Qureishi, Head of Africa Research, Stanbic Bank.
The survey notes that Kenyan firms continued to record an upsurge in new orders, for the second month since lockdowns were lifted in Nairobi and Mombasa, in response to renewed demand from consumers.
This is as normalcy gradually resumes and the economy re-opens. But the pace slowed down in August.
The July Stanbic Bank Kenya PMI increased to 54.2 from 46.6 in June. This reading showed the first expansion in Kenya’s private sector since December, the fastest growth rate in months.
With the infection rate flattening, authorities have continued to ease restrictions, including allowing the resumption of local and international flights.
Both output and new orders are gradually picking up, including fresh orders from European markets for commodities such as horticulture.
Experts maintain a pessimistic outlook in the coming months with effects of the coronavirus pandemic remaining unclear.
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