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Private sector activity improves for the first time since January
New orders too ticked up in August, with export orders received by firms rising for a sixth straight month. Firms noted that improved food supply, increased marketing of products and a calm political environment supported new orders growth - Christopher Legilisho.
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By Phyllis MUCHOKI
Business activities in Kenya improved for the first time in seven months, with output and new orders returning to expansion levels on improved political stability.
The latest Purchasing Managers’ Index (PMI) by Stanbic Bank further shows that job creation accelerated and purchasing activity picked up, whilst firms grew more confident about their August output prospects.
The PMI went above 50 points for the first time since January to hit 50.6 points up from 45.5 in July. It read 52 points in January before consistently dropping in subsequent months.
After deteriorating at the sharpest rate in almost a year in July, output levels recovered slightly in August. Surveyed companies often noted that greater political stability had helped to boost demand and lead to higher activity, especially in the services and manufacturing sectors where growth resumed.
Similarly, inflows of new work expanded over the course of August, bringing to an end a six-month sequence of decline.
However, the rate of growth was only fractional, as improvements arising from reduced political unrest and stronger demand conditions were almost completely offset by the negative impact of price increases.
Moreover, August survey data signaled those inflationary pressures were still historically marked and continued to hit business expenses.
“The August Purchasing Managers Index (PMI) implies economic growth recovering compared to July, as well as a likely positive economic performance in Q3:23. There was a notable expansion of output in August, specifically in services and manufacturing,” commented Christopher Legilisho, Economist at Standard Bank.
While inflation – a measure of the cost of living over a 12-month period, has eased to 6.7 percent, which is within the official target of between 2.5 and 7.5 percent, most Kenyan households will end the year on a low.
Kenya’s new tax package for instance, a host of which were back-dated to July 1, have loosen the local labor market, with employers in many sectors like auto and manufacturing industry confronting a truly tight equilibrium for the first time in decades and face the prospect of salaried employees’ ability to spend on luxury condensed by tough economic times.
