Kenya Private sector enjoys growth in April, PMI shows

By Steve UMIDHA

Kenya’s private sector activity was broadly steady in April, entering slightly into expansion territory after contracting marginally a month earlier, a business survey released today shows.

The Stanbic Bank Kenya PMI signalled broadly stable operating conditions across the private sector during the month under review, as order book volumes and output levels were little-changed since March.

The 12-month outlook continued to rebound sharply from February’s record low, and employment growth was maintained. Average input prices fell for the first time in nearly four years, driven by a record monthly fall in purchasing costs.

The headline PMI registered fractionally above the 50.0 neutral mark at 50.1 in April, up from 49.7 in March. The latest reading was broadly in line with the trend for 2024 so far (50.2) and signalled a broad stabilisation in operating conditions. Since the Stanbic Bank Kenyan survey began in January 2014 the PMI has trended at 51.3.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The volume of new business received by Kenyan private sector companies remained broadly stable in April, as has been the case throughout 2024 on balance. This continued a relative improvement compared with 2023, when new orders fell on ten occasions.

“Private sector activity steadied in April, following a soft print in March. Output and new orders were neutral during the month as firms reported a balanced inflow of new business despite concerns from some businesses about the heavy rainfall across the country.

We share these concerns and worry that growth will slow in Q2:24 because of the widespread devastation and disruptions caused by the heavy rain.

“That said, there was a notable increase in jobs created, quantities purchased, and inventories held by firms during the month, reflecting increases in existing workloads and prospects of new business,” noted Christopher Legilisho, Economist at Standard Bank.

Kenyan firms increased their purchases of inputs in April, only the fourth month-on-month growth seen in the past 15 months.

The rate of expansion was modest, however, reflecting the lack of growth in new work in April.

Suppliers’ delivery times continued to fall on average as vendors competed for business, despite some reports of flooding causing delays. Concurrently, firms were able to expand their inventories for the third consecutive month.

Tamable Inflation 

Indeed, the Kenya Bureau of Statistics (KNBS) reported a 5 per cent annual inflation rate for April, marking a decrease from the 5.7 percent rate recorded in April 2023 after food, fuel, electricity, and housing costs dropped.

“The price of sugar, maize grain-loose, fortified maize flour maize and maize flour loose dropped by 8.3, 3.6, 3.0 and 2.8 per cent, respectively between March 2024 and April 2024,” KNBS said in its latest monthly inflation data.

“During the same period, however, prices of onions- leeks and bulbs, tomatoes and oranges increased by 5.8, 4.3 and 4.0 per cent, respectively.”

KNBS data adds that housing, water, electricity, gas, and other fuels’ index dropped by 1.3 percent, mainly due to a decline in the price of kerosene by 9.7 percent.

Likewise, prices of 200 kWh and 50 kWh of electricity dropped by 6.4 percent and 7.7 percent, respectively.