Stanbic Bank Kenya Set To Release PMI as Shilling Trades Flat on Wednesday

Stanbic Bank Kenya Purchasing Managers Index (PMI) for December is set to be released on Thursday (Today).

The leading indicator has pointed to a contraction in business sentiment (signaled by a print below neutral 50) between May-November 2017 period which was occasioned by the protracted electioneering period which dampened output, new orders and purchasing activities.

A negative sentiment on the private sector consumption, which accounts for circa 80% of total gross economic expenditure, obviously drags the overall GDP growth.

In the 3Q17 period, PMI averaged 43.67 (as compared to 53.43 in 3Q16) and pointed to a sluggish growth in the quarter which decelerated to 4.40 percent from 5.60 percent in 3Q16.

Turnover remained dismal in Wednesday’s session with only 39 million shillings executed on board.

Thursday, economic analysts expect turnover to rebound with a number of deals closed on the medium term and IFB space over the last two days.

Liquidity has also improved after three days of continuous intervention by the Central Bank through reverse repos.

12 billion shillings was on offer and received bids worth only 5.8 billion which was accepted at 10 percent.

The shilling traded flat on Wednesday closing at 103.25 and we continue to expect a gradual weakening. On Wednesday, the government disbursed funds towards free secondary education and analysts expect these funds to trickle through into the market in the short term causing movements in the yield curve.