A surge in new orders in the month of February resulted in more absorption of casual workers in Kenya’s private sector to meet the workloads.
- Stanbic Bank Kenya PMI shows softening of inflationary pressures supported a fresh increase in new order volumes.
- Staff increase during the month were modest, but the fastest since last August.
- However, construction and wholesale and retail activity slipped.
“There was a notable expansion in private sector activity in February, with output increasing in agriculture, manufacturing, and services. Firms noted improved consumer demand as assisting higher output and new orders,” noted Christopher Legilisho, Economist at Standard Bank.
“On the pricing front, firms noted both input and output price pressures easing due to moderating purchase costs, fuel prices declining, and the shilling appreciating during February. Staff costs were flat in February, although staffing levels increased for a second month running.”
Companies reported that improving client demand drove the fastest upturn in sales since January 2023. Firms additionally linked this to new product releases and improved stock levels, which rose slightly, as well as the positive impact of relaxed inflationary pressures.
Falling fuel prices were reportedly a key contributor to lower cost burdens, although expenses still rose sharply overall amid mentions of currency issues and higher VAT payments.
The slowdown allowed firms to raise their selling charges to a softer degree. Charge hikes eased to the weakest recorded for a year-and-a-half and were aligned with the survey’s long-run trend. Nevertheless, rising prices continued to restrict cash flow and spending power, according to survey comments, which meant that total sales growth was only marginal. Sector data signaled that construction and wholesale & retail were still greatly impacted, with sales declining sharply in these segments.
The Stanbic Bank Kenya PMI is compiled by S and P Global from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP.
The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.
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