The index for the month of December increased for the third straight month to 53.7 from 53.0 recorded in November 2021, pointing towards the solid improvement of business activities and continued growth of new businesses.
This was the highest PMI recorded since October 2020 when the index was 59.1, and it is attributable to an upturn in sales and growth in cash flow on the back of continued economic recovery.
Overall cost pressures in the Kenyan private sector increased sharply in December 2021 due to high input purchasing prices driven by higher taxes and higher raw material prices during the month.
The chart below summarizes the evolution of the PMI over the last 24 months:
Despite the increase of the PMI index reading for the month of December 2021, we maintain a cautious outlook in the short-term owing to the increasing cost pressures, high cost of living, political pressures ahead of the August 2022 elections, and concerns of an uptick in COVID-19 infections from the new Omicron variant.
“We expect the easing of COVID-19 containment measures coupled with the continued vaccine rollout across the country to support the recovery of local businesses and consequently increase production and boost sales volumes,” said Cytonn in their report.
The existence and emergence of new COVID-19 variants, such as the Omicron variant, still pose economic uncertainty however it appears the variant is milder than the earlier Delta, “hence we do not expect tighter restrictions, which could negatively affect the general business environment.”
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