Business activity in the Kenyan private sector expanded at its fastest pace in three years in October, according to the latest survey data.
According to the Stanbic Bank Purchasing Managers’ Index (PMI) report released on Wednesday, November 5, the PMI rose to 52.5 in October from 51.9 in September.
The report attributed the growth to stronger sales, increased output, and renewed purchasing activity, supported by easing inflationary pressures.
“The PMI registered in expansion territory for the second month running in October. At 52.5, up from 51.9 in September, the index signalled a solid improvement in overall operating conditions,” the report read.
“Notably, this was the highest that the index has been since February 2022.”
Stanbic PMI Shows Kenya’s Private Sector Hits Highest in 3 Years
The PMI report revealed that most companies in Kenya reported further improvements in sales intakes amid broader economic strengthening. Rising demand also encouraged firms to increase their purchasing activity for the first time since April.
The improved economic environment was supported by a milder increase in business expenses, with input costs rising at the slowest pace in just over a year.
The survey indicated a continued rebound in the Kenyan private sector following disruptions caused by protests in the second quarter of the year.
Output and new business intakes increased for the second consecutive month, with both growth rates accelerating. The expansion in output was the strongest since December 2021.
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Firms Step Up Purchasing as Demand and Output Strengthen
Firms frequently cited robust demand conditions amid improving economic prospects, alongside the impact of new product launches and promotional pricing strategies.
Notably, all the main sectors monitored by the survey experienced an upturn in activity in October.
“This contributed to a broad-based increase in input procurement, with total purchasing activity rising for the first time since April,” the report noted.
There were also some initiatives to enhance workforce capacity, although the pace of job creation remained marginal.
Kenyan businesses reported relatively stable conditions regarding supply chains and price pressures at the start of the fourth quarter, with lead times continuing to shorten for the ninth consecutive month.
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Stanbic Economist Notes Improved Output and Demand as Inflation Eases
Christopher Legilisho, Economist at Standard Bank, said Kenya’s private sector in October saw both output and new orders rise sharply as conditions improved for consumers and firms benefited from softer inflation.
He noted that firms increased the quantities they purchased and raised their inventory levels in anticipation of higher consumer demand.
“They also reported quicker deliveries reflecting increased efficiency and vendor competition. However, firms were less optimistic about future output conditions,” he said.
Employment remained stable in October for most firms, while backlogs shrank as outstanding orders were cleared.
“Pricing indicators were soft in October, as input prices, purchase prices, staff costs, and output prices increased only modestly. Low price pressures imply that, while output conditions have improved, they are not fueling demand-driven inflation,” he added.
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