The Purchasing Managers Index (PMI) released monthly by the Stanbic Bank of Kenya fell to 53 in the month of August 2020 from 54.2 in July.
Despite the Index falling from 54.2 in July, it suggested that the rate of growth remained solid overall according to the index. Any rate that within the range of 50 is an indication of a resilient growth.
Export volumes grew at a record rate but employment figures fell amid efforts to cut wage costs. Although business sentiments improved for the first time since February 2020, they are still relatively weak.
“The employment index still remains below the 50 levels, largely reflecting firms scaling back on wage costs,” said Jibran Qureishi, Head of Africa Research, Stanbic Bank. “Weaker job growth indicates the underlying challenges the road ahead presents, even as business confidence has improved over the past two months.”
Many firms in Kenya moved to fire their employees when Covid-19 came knocking. Some reduced salaries while others forced employees to proceed to unpaid leave to cut down on the costs occasioned by an uncertain financial future brought about by Covid-19.
“Sentiment improved for the first time since February, but remained relatively weak,” the IHS Markit Services PMI by Stanbic Bank of Kenya said on Thursday.
Analysts say that the economy has “slowly started coming back to life” following the move by the government to do away with some of the Covid-19 restrictions that included the cessation of movement in and out of the country.
The government also lifted the ban on secondhand clothes, popularly known as mitumba to allow traders to import them in the country on certain conditions. The government had banned the importation of mitumba to cut down the risk of Covid-19 spread.