Businesses expand at fastest rate in six years after economy re-opening
Steve Umidha @UmidhaSteve
Kenya’s private sector recorded a fourth straight month of growth in October, with output and new orders rising solidly amid phased re-opening of the economy, and bringing an end to seven months of job shedding.
The latest Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey posted 59.1 last month, signalling the sharpest improvement in business conditions since the survey began in January 2014 – a six year spell.
Last month’s reading bettered September’s 56.3 which was until October was the highest reading since April 2018 in the health of the private sector economy.
Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration.
The PMI index rose from 53 in August from 54.2 a month earlier – a consistent steady growth since the downturn caused by the Coronavirus (Covid-19) outbreak.
“Output rose at a substantial pace at the start of the final quarter, thereby extending the current period of expansion to four months.
Panelists often mentioned improvements in client demand after lockdown restrictions eased further,” reads the report released yesterday.
With the government easing lockdown restrictions during the third quarter of the year, the October PMI index shows that firms saw a release of pent-up demand as clients largely returned to markets.
Firms raised their input buying during the month, with the rate of expansion the sharpest in the series so far.
Subsequently, PMI data shows that pre-production inventories rose markedly with respondents, acknowledging that stocks increased in tandem with favourable predictions for future demand.
On the price front, purchase costs faced by Kenyan private sector firms rose solidly, which firms linked to higher raw material prices.