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Coastweek --
Kenya’s private sector growth picked up slightly in August,
supported by stronger job creation and a sharp rise in input
stocks according to the latest Purchasing Managers’ Index™ (PMI™)
data released by CfC Stanbic Bank and market research firm, IHS
Markit.
With output and new
orders also growing solidly, business conditions continued to
improve. That said, the degree of improvement remained
historically subdued. On the price front, muted cost pressures
led to a weaker increase in charges.
The seasonally
adjusted PMI inched higher in August, posting 53.5 compared to
53.3 in July. The latest reading pointed to sustained steady
growth of the private sector, following a marked slowdown at the
end of the second quarter. However, while above June’s record
low (51.5), the index remained weaker than the series average
(54.8).
Commenting on
August’s survey findings, Jibran Qureishi, Regional Economist
E.A at CfC Stanbic Bank said: “The private sector PMI continued
to recover after falling to a survey record low of 51.5 in June.
New orders from abroad supported business as exports rose at the
fastest pace since May. Subdued costs for the remainder of the
year should assist firms in boosting production and subsequently
support output; however this benign outlook on costs could alter
if the currency faces volatility via portfolio outflows
following the recent amendment to the banking bill. Nonethless,
high profile conferences like the recently concluded TICAD are
evidently underpinning an impressive recovery in the tourism
sector.”
After having eased
to a series low in June, output growth was maintained close to
July’s solid pace in August. New orders rose markedly, albeit at
a slightly reduced rate compared to July. Helping to support
growth of total new work was a renewed expansion of new business
from abroad. Exports increased at the steepest pace since May,
following a stagnation one month previously.
“While higher output
and new orders both contributed to the above-50.0 PMI reading, a
key driver of overall growth was a sharp rise in input stocks.
The rate of inventory building accelerated to the
second-quickest since data collection started in January 2014.
Improving demand was cited as the main reason for higher stocks.
Purchasing activity also rose solidly in the latest period,” Mr.
Qureishi explained.
According to the
survey, the rate of job creation rebounded in August, having
slowed to near-stagnation at the start of the third quarter.
However, hiring remained only modest overall. Subsequently,
backlogs of work continued to accumulate in line with stronger
order books.
Price pressures in
Kenya’s private sector meanwhile eased in August. Total input
costs rose at a slower pace than in July, with the latest
increase also muted in the context of historical data. Charges
showed a similar trend. |
