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Private sector activity gathers pace in May, job creation highest in 20 months

Private sector activity gathers pace in May, job creation highest in 20 months

There were expansions in the services, manufacturing, and wholesale and retail sectors.

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The Kenyan private sector experienced a surprising surge in activity during May, defying expectations of a slowdown caused by recent floods.

The findings, by Stanbic Bank Kenya PMI revealed strong growth, driven by a combination of falling input costs, increased demand, and ongoing job creation.

Output and new orders surged due to higher consumer demand, particularly in the services, manufacturing, and wholesale and retail sectors.

Input prices continued to decline for the second consecutive month, fueled by lower fuel prices and import costs thanks to a favorable exchange rate, indicating easing inflationary pressures.

The private sector continued its hiring streak for the fifth consecutive month, fueled by increased workloads and optimistic business prospects, demonstrating a healthy labor market.

Christopher Legilisho, Economist at Standard Bank commented on the findings, stating that private sector activity was surprisingly strong in May, implying a further improvement in economic activity, as they had expected to see some impact from the recent floods.

“Output and new orders recorded strong gains in May as firms reported increased consumer demand. There were expansions in the services, manufacturing, and wholesale and retail sectors. However, heavy rains saw output declining in the agricultural and construction sectors,”.

Job creation continued for a fifth successive month amid larger workloads and prospects of new business. Firms also purchased larger quantities, raising their inventory levels and improving their buffers. Firms also increased their purchasing activity, leading to higher inventory levels and improved buffers. While businesses are optimistic about the future, their confidence remains below the long-term average, suggesting a cautious approach.

Despite the overall positive picture, the survey highlighted the impact of the recent floods, which led to a decline in output in the agriculture and construction sectors.

However, the overall trend suggests a healthy and dynamic economy, potentially boosting demand for cement as infrastructure projects and construction activities pick up.

 

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