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Kenya’s private sector activity bounced back in February to record its first expansion since August, bouyed by easing inflation and gains in agriculture, manufacturing and services, a survey showed on today
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) jumped to 51.3 in February from 49.8 a month earlier. Readings above 50.0 signal growth, while those below point to a contraction. It is the first time since August that the figure has gone above 50.
“Business activity expanded across the Kenyan private sector … as a further softening of inflationary pressures supported a fresh increase in new order volumes,” Stanbic Bank said in commentary accompanying the survey.
Inflation fell to 6.3% year-on-year in February from 6.9% a month earlier, data from the Kenya National Bureau of Statistics showed.
“There was a notable expansion … with output increasing in agriculture, manufacturing, and services. However, construction and wholesale & retail activity slipped,” Christopher Legilisho, an economist at Stanbic Bank, said.
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 signalled that construction and wholesale & retail were still greatly impacted, with sales declining sharply in these segments.
Furthermore, overall business sentiment was at its lowest level on record in February, as companies generally refrained from projecting an increase in activity over the coming year. Only 6% of companies were optimistic of an upturn.
Despite this, employment levels rose in February on the back of higher new order intakes, with firms citing the hiring of casual workers to meet workloads.
Staff increases were modest, but the fastest since last August. Purchases of inputs also expanded, ending a five-month run of decline, whereas improvements in supplier performance broadly stalled.