Private sector hit hard in April on the back of stiff Covid-19 restrictions
Seth Onyango @SethManex
Kenyan businesses suffered their worst month in April but leapt up marginally in May on the back of travel restrictions imposed to curb the spread of coronavirus.
Stanbic Bank Markit Purchasing Managers’ Index (PMI) came in at 36.7, higher than April’s 34.8 signalling a further steep decline in overall business conditions across the private sector.
But the commercial space is still not showing signs of easing up since the May reading fell below the 50 mark that separates expansion from contraction.
Stanbic is projecting more bloodletting in the coming months for businesses even as President Uhuru Kenyatta plans to lift restrictions to insulate economy from further damage.
Jibran Qureishi, Regional Economist East Africa at Stanbic forecasts the epicentre of Covid-19 to be felt in second quarter ending June, with respect to economic activity.
“Business conditions have contracted for five consecutive months now. In fact, the employment sub-index fell by the sharpest level in May since data collection began.
Consequently, the reduction in the workforce has reduced overall input prices for private sector firms,” he said.
“Furthermore, due to weak domestic demand conditions, firms have looked to reduce overall output prices too. Given the tough economic environment, exacerbated by Covid-19, higher costs passed onto consumers initially resulted in a decline in sales.”
Stanbic says business conditions have worsened in each month of 2020 so far, with the latest deterioration marked by historical standards.