The Stanbic Bank Kenya Purchasing Manager Index(PMI) edged up slightly to 51.1 in August 2021 from 50.6 in July, mainly driven by faster growth in new business and accelerated new order levels.
The latest reading pointed to growth in private sector activity for a fourth straight month, although it was slower than the series average.
PMI Index has been in a rise for four straight months
Increased client demand drove up output levels, but the output rose at the slowest rate in 4 months.
On the price front, input cost inflation eased to a 6-month low. Consequently, output charges softened to the lowest level so far this year.
Business confidence was one of the weakest in the series history. It was only slightly above April’s record low, with only around one in five surveyed firms expecting output to grow over the next 12 months.
Business conditions in the private sector improved for the fourth month in August, with a faster expansion than in July.
While more jobs were created, output grew the slowest in four months, with business confidence hitting a near-record low.
A Purchasing Managers’ Index™ (PMI) with readings above 50.0 shows an improvement while those below 50.0 indicating a decline.
Recovery of market activity after the COVID-19 lockdown led to an improved cash flow and customer demand.
While a surge in sales triggered firms to increase output, the expansion rate was at its lowest recorded in the PMI series.
Despite the higher activity, firms had more backlogs of work, which in part encouraged companies to add to their workforces.
The outlook for the future for those surveyed slumped to the lowest in August over effects of the COVID-19 pandemic on the economy, with only one in five firms interviewed projecting more output over the next 12 months.
According to analysts at Trading Economics, Kenya’s PMI could hit 53.60 points by the end of 2021.
In the long-term, according to the firm’s econometric models, the Kenya Stanbic Bank PMI is projected to trend around 53.00 points in 2022 and 54.00 points in 2023.
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