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PMI survey: Modest private sector growth maintained in December

Thursday, January 7th, 2021 00:00 |
A shopper at a local supermarket. Analysts say cost of maize seeds which are used to process maize flour will also soar having previously been taxable at 14 per cent, but are now exempt. Photo/PD/FILE

MONEY:  Kenya’s private sector recorded a modest growth in December last year, with output rising at the slowest rate in six months, while new orders increased marginally.

The latest Stanbic Bank Kenya Purchasing Managers Index (PMI) Survey recorded 51.4 points during the month compared to 51.3 in November, signalling negligibleimprovement in business conditions.

This expansion was even softer than those experienced between July and October when the economy was rehard done by the Covid-19 pandemic.

Improved conditions

Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration.

During the month under review, business confidence tanked below November’s previous record low at the end of the year, with business owners expressing concerns over the impact of the pandemic on future activities.

“Kenyan businesses continued to expand their output modestly at the end of the year.

The rate of growth eased fractionally from November, and was the softest in the current six-month run of expansion,” reads the survey released yesterday.

“Improved cash flow, looser Covid-19 restrictions and higher customer orders drove the upturn... although some companies reported weak client purchasing power,” observed panelists interviewed during the review.

Most companies said raw materials were in short supply, however, delivery times at Kenyan companies improved for the seventh month in a row in December, but were at the weakest rate in this period.

Some suppliers held back input deliveries due to lack of payments, while there was also disruption to global supply chains from the pandemic.

“This slowdown was inevitable following the significant improvements in economic activity witnessed in October after the relaxation of public health restrictions.

Furthermore, a resurgence in Covid-19 cases as well as the re-introduction of lockdowns in some international markets has lowered expectations for the post pandemic recovery in 2021,” csaid Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank.

Overall, firms remained optimistic of an expansion in output by the end of 2021.

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