Stanbic Bank’s PMI Slightly dips to 55.4 in May

The seasonally adjusted PMI fell from April’s 27-month high of 56.4 to 55.4 in May according to a statement released by Stanbic Bank of Kenya.

Despite softening, the latest reading signaled a sharp improvement in operating conditions. Notably, the headline index was above the historical average (52.8).

Output rose midway through the second quarter, thereby stretching the current period of expansion to six months. Slightly easing from April’s survey record, the rate of growth remained strong and above the series average. According to anecdotal evidence, favorable economic conditions and strong underlying demand were the key factors behind the latest expansion.

Mirroring the trend for output, new business placed at Kenyan private sector firms rose for the sixth month in succession in May. Despite softening from April’s 16-month high, the rate of growth remained sharp overall.

Panelists attributed new client wins to stronger market demand. Amid reports of stronger demand from international markets, growth in new export orders also remained strong.

Purchasing activity rose sharply on the back of robust client demand. In fact, growth was only slightly slower than the survey record seen in April. Pre-production inventories across Kenyan firms rose as a result, and at a marked pace.

In response to greater output requirements, firms raised their staffing levels during May. That said, jobs growth moderated from April’s 16-month high and was only marginal. Meanwhile, outstanding business across the Kenyan private sector was unchanged in May, thereby ending a two-month period of growth.

On the price front, firms continued to face higher input costs during May. According to anecdotal evidence, firms faced upward cost pressures mainly due to higher demand and a limited supply of raw materials. Meanwhile, wages rose at a modest pace.

Subsequently, firms raised their average selling prices for the sixth consecutive month in May. Output charge inflation was sharp and the strongest in three months. Anecdotal evidence indicated that improving demand helped firms to pass higher costs through to clients.