Private sector activities improve to 50.9 points in November

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Private sector activities improve to 50.9 points in November
Private sector activities improve to 50.9 points in November

Africa-Press – Kenya. Kenyan private sector firms saw a renewed expansion in business activity in November, latest survey data shows, as new orders strengthened for the third month in a row.

The upturn led to further increases in employment, purchasing and inventories, whilst vendor performance continued to improve.

Although Kenyan companies again indicated steep price pressures, rates of inflation for both input costs and output charges eased to three-month lows.

The headline figure derived from the survey is the Purchasing Managers’ Index (PMI) rose to 50.9 in November to signal a slight improvement in the private sector’s health from 50.2 points in October.

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

Commenting on the growth, Standard Bank economist Mulalo Madula said business activity in Kenya continues to grow, albeit slowly, for the third consecutive month corroborating other data such as private sector credit growth.

“A positive assessment of the 12-month outlook suggests that businesses expect improvement despite the expected challenging global economic environment,” Madula said.

Business conditions have strengthened in each of the past three months, following a five-month sequence of contraction.

The rise in the headline index was partly due to a renewed expansion in output levels midway through the final quarter of the year. Business activity increased slightly after a marginal decrease in October.

Surveyed businesses mainly attributed the rise in output to improving new order inflows and favourable weather conditions. New order volumes picked up for the third month running, and at a moderate pace that was quicker than in October.

A number of panellists cited that new customers helped them to secure higher work inflows.

New orders rose in four of the five sectors monitored by the survey and were unchanged in services.

In line with the trend for new orders, Kenyan firms reported increases in employment and purchasing for the third month in a row.

The rise in staffing levels was broadly similar to those seen in the prior two months and only marginal, but nonetheless helped firms to reduce their backlogs for the first time since April.

The rate of purchasing growth quickened slightly and was solid. With purchases rising, Kenyan firms were able to expand their inventories in November. At the same time, vendor performance improved modestly and for the third month running.

November data signalled another steep increase in input costs in the Kenyan private sector, amid reports of rising import costs due to a weaker exchange rate against the US dollar, as well as higher taxation and transport costs.

However, a softer rise in purchase prices, and a renewed fall in staff wages, meant that the overall rate of cost inflation slowed to the weakest since August.

Subsequently, Kenyan firms raised their output charges at a sharp, but softer pace in November.

Businesses remained positive regarding future output in November, amid plans for new branches, new products and greater marketing.

The degree of optimism dropped sharply from October’s 15-month high.

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