Kenya’s private sector reported solid improvement in business conditions in November, after growth easing to a four-month low at the start of the last quarter of 2016. According to the Purchasing Managers’ Index (PMI) survey released by Stanbic Bank and HIS Markit, the seasonally adjusted PMI rebounded to 53.3 in November, up from October’s four-month low of 52.0.
Jibran Qureishi, Regional Economist East Africa at Stanbic Bank said the latest figure was broadly in line with the average seen over the third quarter at 53.4, although remained below the overall series trend of 54.6.
“Contributing to growth of the sector as a whole was a sharp expansion in new work. Sustained by a sharp rise in new orders, the PMI rebounded,” he said, adding that the demand from neighbouring Uganda, which is a key trading partner for Kenya, was a key reason behind the recovery.
“Looking ahead, cost for firms could start edging higher owing to the weaker exchange rate. However, more specifically we remain concerned around the sharp slowdown in private sector credit growth, which could eventually prove to be a stumbling block for activity within Kenya’s private sector,” he said.
Qureishi said with the demand picking up, companies raised their input stocks at a record pace with the rate of pre-production inventory building quickening as a result, with the respective index climbing to its highest since data collection began in January 2014.
Meanwhile, total input prices rose more quickly than in October, mainly driven by higher staff costs. The rate of salary growth reached a nine-month high, linked to the employment of skilled workers and commission-based payments. On the price front, average charges rose at the fastest rate since December 2015.
[crp]
