Headlines

December Registered The Softest Rises In Input Costs And Output Prices

BY Soko Directory Team · January 10, 2024 01:01 pm

The latest Kenya PMI® findings signaled a strong move towards stability in private sector business conditions in December, helped by a considerable cooling of inflationary pressures.

Rises in input costs and output prices were the softest since April, having slowed markedly from record highs in October.

Subsequently, many companies saw a recovery in new work amid improved client spending, offsetting the impact of cost-of-living pressures. As such, new orders, output, and employment all declined to lesser degrees.

The headline figure derived from the survey is the Purchasing Managers’ IndexTM (PMI®). Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration.

The headline PMI moved three points higher in December, up to 48.8 from 45.8 in November, to signal a modest and softer decline in operating conditions across Kenya.

Private sector conditions have now deteriorated for four months running, although the latest decline was the weakest in this sequence.

Output levels at Kenyan companies fell to a lesser extent at the end of the year, as firms highlighted a partial rebound in demand conditions. Similarly, new order inflows dropped at the softest pace in four months and only slightly.

According to anecdotal evidence, customer turnout and purchasing power improved amid a softening in inflationary pressures, especially across the services sector. Firms were also supported by the sharpest increase in new export business in exactly two years.

On the flip side, contractions in output and new orders remained sharp in the manufacturing and construction sectors, as firms continued to signal cost-of-living pressures and weak demand conditions. December survey data also highlighted a marked slowdown in input cost inflation across the private sector.

After reaching a survey-record peak in October, the rate of inflation slowed for the second month running and by the greatest degree ever noted. While firms indicated that currency weakness and tax burdens continued to lift overall input costs, the settling of fuel prices somewhat alleviated the rise.

Similarly, average output charges rose to a much softer degree in December, albeit remaining sharp and faster than the long-run average. Sector data showed a cooling of inflationary pressures in all segments except agriculture, with manufacturers even reducing factory gate prices. With cost pressures easing and the downturn in sales softening, purchasing activity at Kenyan firms was broadly stable in December, helping businesses to raise their inventories and deplete backlogs of work.

Lead times on purchased items were shortened for the third month running. The drop in employment levels was also tempered at the end of the year, with the latest data indicating the softest fall since September. Agriculture was the only sector to see a rise in staffing.

Nonetheless, Kenyan businesses were less optimistic about future activity in December, with the degree of confidence slipping to a seven-month low. Expectations were also among the lowest seen on record, with just 11% of panelists predicting growth over 2024.

About Soko Directory Team

Soko Directory is a Financial and Markets digital portal that tracks brands, listed firms on the NSE, SMEs and trend setters in the markets eco-system. Find us on Facebook: facebook.com/SokoDirectory and on Twitter: twitter.com/SokoDirectory

Trending Stories

Government and Policy Kenya Is Struggling With Debt As Modest Revenue Is Collected With Limited Development Investment Steve Biko Wafula

Entrepreneur's Corner Kenyan Clients Don’t Care Whether You’re In the ICU: The Brutal Truth Of Entrepreneurship Soko Directory Team

Government and Policy Saccos Clamp Down On Struggling Businesses, Recover Sh491 Million In A Ruthless Crackdown Soko Directory Team

Headlines Are The SACCOS The Infinite Money Glitch Of Kenya? Soko Directory Team

Entrepreneur's Corner The Greatest Skill Everyone Should Master Is The Skill Of Knowing How To Manage Money Soko Directory Team

Headlines New Business Rises At Strongest Pace In Six Months Soko Directory Team

Entrepreneur's Corner What Is The Easiest Way To Start A Business That Will Be Profitable And Sustainable? Steve Biko Wafula

Headlines Are The SACCOS The Infinite Money Glitch Of Kenya? Soko Directory Team

Government and Policy TSC Revises Registration Requirements For Teachers Getrude Mathayo

Headlines Jubilee Health Insurance’s “Always With You” Campaign Wins MSK Award Soko Directory Team

Explore Soko Directory

Banking Blogging Commodity Watch Did you know Entertainment Entrepreneur's Corner Feature Government and Policy Headlines Investment Lifestyle Market News Money Opinion Press Releases Stock Watch Technology

Soko Directory Archives

March 2014 (2)

March 2013 (10)
June 2013 (1)