Businesses see lift in activity from flat COVID-19 infections

Business expansion as measured by the Stanbic Bank Kenya Purchasing Managers Index (PMI) rebounded in February after a dip at the start of the year.

The headline PMI leading which signals an improvement or decline in business conditions rose above the 50 points confidence mark during the month to reach 52.9 points from 47.6 points in January.

The rebound has been attributed to flat COVID-19 infections allowing businesses to operate at near optimal levels without fears of potential reinstatement of COVID-19 related restrictions.

“Domestic demand recovered strongly in February driven by increased customer numbers following a reduction in COVID-19 cases as well as heightened marketing efforts by firms. Firms responded to the higher demand by increasing their output and quantity of purchases significantly during the month,” said Stanbic Bank Kenya Fixed Income and Currency Strategist Kuria Kamau.

Output by private businesses was similarly on the rise with the sectors of manufacturing and agriculture marking the strongest upturns.

Local firms have however been hit by higher input costs on increased supplier tax burdens and costlier fuel.

The rate of input cost inflation was the strongest since September 2018.

The higher input costs has seen businesses suffer from cash flow issues to see employment fall for the first time in 10 months.

Nevertheless, the 12 month outlook by firms rose to a five-month high as concerns around the COVID-19 pandemic dissipate.