Kenya private sector activity fall to 34.4pc lowest-ever level in October

Kenya’s private sector activity declined in October especially for the manufacturing and services sector to 34.4 percent from 40.9 percent in September.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI)attributed this to the prolonged political instability in its latest findings.

“The heated political temperature has resulted in a challenging couple of months for Kenya’s private sector,” said Jibran Qureishi, economist for East Africa at Stanbic Bank.

The leading indicator surveys approximately 400 private sector firms across the Kenyan economy and the composite index is based on five individual weighted indices: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stock of items purchased (10%).

The print in the last five monthly readings has shown contraction; depicted by a number below 50 with September reading touching a 45-month low of 40.90.

This has largely been attributed to a decline in output activities due to the-then protracted electioneering period coupled with strain to credit access linked with the interest rate capped regime.

A concern in the last two prints has been a fall in employment in the private sector as a response to lower output requirements.

“We are of the view the October print will point to a contraction (below 50 and near prior month’s level) as the review month was marked with heightened political noise with our expectation of an expansionary turnaround to come in 1Q18,” noted Genghis Capital before the release.