The PMI reading for Kenya fell below the 50-point neutral mark in April to 49.5 from 50.5 in March 2022.
The Stanbic Bank Kenya PMI, dropped below the 50-mark first time in three months.
Output and new orders fell as clients reduced their spending due to marked increases in selling prices, fuel costs and other living expenses.
However, employment increased to a lesser degree than the previous month. The increase in staff capacity, alongside lower demand, helped lead to a stabilization of backlogs of work.
Both input costs and selling charges surged to fresh highs due to the Russia-Ukraine conflict on the price front.
Despite high prices, purchasing activity continued to increase sharply as firms looked to build buffer stocks of items at risk of being in short supply.
PMI drop attributed to rising inflation and low client spend
Business confidence dropped to a record low for the second successive month amid concerns over rapid price inflation and reduced client spending.
In April, the PMI for Kenya shows deterioration in business conditions, which was the deepest since April last year, hit by a fall in new order volumes. The panellists cited a lack of money and a delay in delivering raw materials. The worst affected sectors by the deteriorating business environment included services, construction and agriculture.
The survey found that rising fuel prices and cost of goods led to clients cutting their spending.
Stanbic Bank said there was an overall upturn in export orders in April, as respondents again highlighted a negative impact on demand from the Russia-Ukraine war.
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