Businesses In Kenya Weakened Slightly In September – PMI

The latest survey data signaled a slight deterioration in Kenyan private sector conditions in September. The Stanbic Bank Keny PMI® dipped below the neutral mark, after recording a slight recovery in August following disruption to companies caused by protests.

Reports of economic challenges for both businesses and households prompted a reduction in sales, leading to a renewed cutback in activity. Positively, the slowdown helped to ease the rate of input price inflation, contributing to only a marginal rise in output prices.

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

September saw the headline PMI drop below the 50.0 nochange mark, falling to 49.7 from 50.6 in August, to indicate a slight deterioration in the health of the Kenyan private sector economy. The decline followed the first improvement in business conditions for three months in August.

Surveyed businesses registered a slight decline in their activity levels at the end of the quarter, coinciding with a renewed drop in new business intakes. Anecdotal evidence suggested that challenging economic conditions at clients such as reduced cash flow led to lower intakes of work placed at surveyed firms.

That said, the pace of contraction was only marginal, with several panellists continuing to see sales improve amid greater customer turnout, higher investment and a positive impact from marketing.

A renewed decline in new business across the service sector coincided with sustained contractions in the agriculture and wholesale & retail segments. At the same time, manufacturers and construction firms registered higher sales.

Despite lower demand on average, Kenyan firms reported an expansion in their purchasing activity for the second month running. Survey respondents linked the move to the shoring up of stocks amid hopes that sales will strengthen.

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