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Business climate improves after political storm

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Business conditions improved in December for the first time in eight months amid reports of greater political stability.

According to the Purchasing Managers’ Index for December by Stanbic Bank, growth was underpinned by expansions in output, new orders, stocks of purchases and employment, thereby reversing the recent downward trend.

Furthermore, the rate of expansion was the fastest since September 2016 and sharp overall.

Panellists reported that reduced political tensions and improved customer demand were the key factors behind greater output.

“The Stanbic PMI rose above the 50.0 level mark for the first time since April as the private sector began to benefit from political stability. Looking ahead, we remain optimistic that growth will recover over the coming year supported by the agriculture and tourism sector, while resumption in public spending will also add some much-needed stimulus,” said Jibran Qureishi, Regional Economist EA at Stanbic Bank.

New business at Kenyan private sector companies rose for the first time in five months during December.

New export orders also rose for the first time in five months amid reports of greater international demand for Kenyan products.

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“Moreover, the rate of expansion was sharp and the fastest since December 2016,” the report states.

On the price front, the Kenyan private sector faced greater overall input costs with the rate of input price inflation intensifying to the sharpest in 26 months.

Anecdotal evidence pointed to a general rise in raw material prices.

“Reversing the downward trend in purchasing activity, input buying rose for the first time in five months during December. Subsequently, firms added to their pre-production inventories, thereby ending a four-month sequence of depletion. Overall, the rate of accumulation was the most pronounced since January,” the report highlights.

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