Private firms end eight-month job cuts run as activity hits record high in October
Kenya’s private sector halted an eight-month job cuts run to grow their payroll numbers in October as activity touched a new record high.
According to the just released Stanbic Bank Purchasing Managers Index (PMI), the headline expansion in private sector activity was measured at 59.1 points from 56.3 points in September mirroring an expansion in output.
The expansion is the broadest on record since the establishment of the index in January 2014 and follows an extended ease to COVID-19 restrictions at the start of October.
“Business confidence has been on the rise over the last couple of months, courtesy of easing domestic containment measures which has boosted demand, albeit from a low base in April and May,” said Stanbic Bank Head of Africa Research Jibran Qureishi.
Staff levels increased on the back of a strong demand for goods and services in both the domestic and oversees markets triggering companies to hire new employees to meet orders.
Similarly, the increased demand has a knock on effect of raising company inventory purchases in favourable predictions for future demand.
Output by firms grew at its sharpest rate on record with firms noting greater money circulation and the re-opening of schools and businesses.
New orders grew for the fourth straight month as companies marked a surge of export orders from European countries.
Output prices nevertheless increased for a fourth month running as inflation accelerated to an eight-month high as both input and purchase prices shot up.
The companies future output index rebounded marginally during the month from a series low in September with firms indicating plans to launch new products, expand operations and improve marketing efforts.
Kenya’s private sector however faces new anxieties ahead of the revision of COVID-19 restrictions which if reinstated could dampen the outlook for further rebound.
“That being said, with lockdowns being re-imposed in some major international trading partners, new orders could ease over the coming months especially if external demand falters. Moreover, with COVID-19 cases also on the rise nationally, the risk of further containment measures pose downside risks to economic activity, prompting us to be cautious.” Mr Qureishi added.