Kenya’s private sector showed significant signs of recovery in August, after July data that indicated business activity had been heavily impacted by weak sales and protest-related disruptions, according to the latest Stanbic Bank Kenya Purchasing Managers Index (PMI) report.
According to the report, Business confidence reached its highest level in two and a half years, reflecting growing optimism despite ongoing challenges such as rising costs.
“Businesses also showed greater confidence in the year-ahead outlook, as they hoped that new marketing activities and product offerings would support growth,” the report stated.
“In fact, positivity was at its highest level in two-and-a-half years. However, firms were still beset by a marked rise in overall cost burdens.”
Kenya’s Private Sector Business Confidence Hits 30-Month High
The headline figure derived from the survey is the PMI, where readings above 50.0 signal an improvement in business conditions compared to the previous month, while readings below 50.0 indicate a deterioration.
The PMI increased to 49.4 in August, up from a 12-month low of 46.8 in July. Although still below the 50.0 no-change mark, the index signalled a much softer decline in operating conditions midway through the third quarter.
According to the report, new orders received by Kenyan businesses fell for the fourth consecutive month in August; however, the rate of decline slowed significantly and was the slowest recorded during this period.
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While some firms continued to highlight weak purchasing power among clients, others reported a pick-up in new business and a general recovery in economic conditions following the recent protest-related disruptions.
As a result, output levels fell at a more modest pace during the latest survey period. There was also a softer reduction in the purchasing of inputs, as some companies were encouraged by the improving demand outlook to restart procurement activities. This allowed inventories to rise slightly after a drop in July.
Employment and Vendor Performance Improve in Kenya as Inflationary Pressures Ease
Employment levels also increased. Although job creation remained mild, the uplift was the fastest seen in 15 months.
Enhanced workforce capacity and inventory building enabled firms to reduce their backlogs for the third consecutive month.
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Vendor performance improved notably in August. Greater competition across the supply chain reportedly led to the fastest reduction in delivery times since October 2021.
Kenyan companies reported a solid increase in input costs in August, although the pace of inflation slowed for the first time in five months.
While wage pressures intensified, the rise in purchase prices was less marked than in July.
Several firms commented on higher costs related to taxes on items such as fuel. Nevertheless, as part of efforts to stimulate a recovery in demand, output charges rose only marginally and to the lowest extent in 12 months.
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Thanks for president Ruto, looking upon Kenyans, integrity,