January’s PMI Dropped slightly to 53.2 but Still Solid

Stanbic Bank Kenya has released the Purchasing Manager’s Index (PMI) for the month of January, indicating a slight drop from what was recorded in December 2018.

According to Stanbic, the PMI for January came in at 53.2, down from 53.6 in the month of December to signal a weaker, but still solid improvement in business conditions at Kenyan private sector firms.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The slight fall in the headline index was partly due to a softer increase in new orders in January. The rate of growth eased to the least marked in four months, although it was still sharp overall. Meanwhile, new export orders increased at the sharpest rate since October, with many businesses reporting higher foreign demand.

Business activity at Kenyan companies continued to rise sharply, with the rate of output growth ticking up to a three-month high. Activity has risen in each month since December 2017. Firms were boosted by the influx of new business and stronger client bases. As a result, backlogs declined solidly and at the fastest rate in 14 months.

Employment growth remained modest in January, despite a strong rise in orders. Where workforce numbers did rise, panelists related this to new clients and branch openings.

Firms also cut back on purchasing activity growth in January, with the rise in input buying the weakest in 13 months. This was reflected by a smaller increase in stocks, albeit one that was still marked.

Lead times decreased at a more pronounced pace in January. Businesses found that suppliers showed strong response rates to input orders, often attributed to high competition in the market.

On the price front, firms increased average charges at the softest rate in 14 months in January, with data indicating a marked fall in the rate of inflation from December. The modest rise was linked to higher demand, although several firms reduced charges due to lower fuel prices.