Kenyan businesses saw a renewed expansion in activity in November as sales strengthened for the third month in a row, the latest PMI survey data shows.
The private sector mainly attributed the rise in output to improving new order inflows and favourable weather conditions.
The uptick in activity saw the headline figure derived from the Stanbic Purchasing Managers’ Index™ (PMI) survey improve to 50.9 from 50.2 in October.
Despite the improved business activity, Kenyan companies indicated steep price pressures as rates of inflation for both input costs and output charges eased to three-month lows.
“The latest PMI data showed that business activity in Kenya continues to grow, albeit slowly, for the third consecutive month corroborating other data such as private sector credit growth,” Mulalo Madula, Economist at Standard Bank.
In line with the trend for new orders, Kenyan firms reported increases in employment and purchasing for the third month in a row.
The survey noted that the rise in staffing levels was broadly similar to those seen in the prior two months and only marginal, but nonetheless helped firms to reduce their backlogs for the first time since April.
Further, the rate of purchasing growth quickened slightly and was solid. With purchases rising, the firms were able to expand their inventories in November.
At the same time, vendor performance improved modestly for the third month running.
The November data signalled another steep increase in input costs in the Kenyan private sector amid reports of rising import costs due to a weaker exchange rate against the US dollar and higher taxation and transport costs.
However, a softer rise in purchase prices, and a renewed fall in staff wages, meant that the overall rate of cost inflation slowed to the weakest since August.
Subsequently, Kenyan firms raised their output charges at a sharp but softer pace in November.
Finally, businesses remained positive regarding future output in November amid plans for new branches, new products and greater marketing.
The degree of optimism dropped sharply from October’s 15-month high, however.
“A positive assessment of the 12-month outlook suggests that businesses expect improvement despite the expected challenging global economic environment. This has led businesses to increase purchasing activity almost as strongly as in October and build up inventories,” Mulalo Madula.
Read also; Private Sector Declines in August Amidst Elections-PMI.
