Business conditions within the country have improved significantly in October, according to a report by Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI).
According to the report, export demand grew rapidly, while new projects and favourable weather conditions also boosted output. As a result, firms raised employment at the fastest rate in six months.
The report further reveals that the latest PMI reading was up from 52.7 in September to 54.0 in October which signaled a solid improvement in business conditions across Kenya’s private sector. Following September’s ten- month low, the latest figure suggests a return to the buoyant business health seen earlier in the year.
“Higher output levels were driven by a sharp increase in new business, as a number of companies reported new client wins. Both domestic and foreign demand picked up at a rapid pace, with new export orders rising at the joint-second quickest rate across the series history,” the report reads.
“In order to meet higher demand, Kenyan private sector firms raised their purchasing activity at a faster pace in October. As a result, inventory levels also grew rapidly. Supplier delivery times shortened again, with firms commenting that greater competition had contributed to improved vendor performance.”
However, the report also revealed that businesses within the country continued to elevate their selling prices despite a lower inflation rate as compared to the preceding month of September.
“The slowdown partly reflected a marginal easing in the rate of input price inflation. Higher fuel taxes continued to exert pressure on purchasing costs, while food commodities and raw materials also experienced price rises in the latest survey period. Staff wages continued to grow, with the rate of inflation marginally quicker than seen in September,” the report explains.
The Stanbic Bank Kenya Purchasing Managers’ Index is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Kenyan economy, including agriculture, mining, manufacturing, services, construction and retail.