Private sector activity expands further in September
Private sector activity in the country expanded for a third consecutive month in September as the economy recovers from the worst of the pandemic.
According to the monthly published Purchasing Managers Index (PMI) by the Stanbic Bank, the rate of expansion during the month was the highest since April 2018 with the PMI reading standing at 56.3 points from 53 points in August.
The continued strength seen in the private sector is on the back of the loosening of COVID-19 restrictions by the government across July and August.
“With the government easing lockdown restrictions during the third quarter of the year, firms saw a release of pent up demand as clients largely returned to markets,” noted the index.
Customer demand rebounded strongly and at the highest pace seen since January 2016 with new orders seeing a third month of consecutive growth including foreign orders which were anchored on sales made in Europe and the Middle East.
The high level of client demand saw an uptick in the backlog of work during the month as firms struggled to meet new orders.
The acceleration in demand forced companies to hire new staff ending a seven-month jobs freeze in the private sector even as the majority of enterprises continued to pursue lowered costs by shedding employees.
As such, staff costs ended a five-month decline sequence.
Companies grew their stock of inventories for a third straight month in anticipation of sustained new orders in the near term with the rate of accumulation standing at its highest since August 2019.
Output prices were nevertheless higher on a month over month basis as firms run up higher input and purchases costs.
In spite of rebounding output, firms future expectations across the next 12 months fell to their lowest ever on record since the series was set in January 2014.
Stanbic Bank Head of Africa Research Jibran Qureishi links the dismal expectations to anxiety over a second COVID-19 hit.
“The PMI indicated further improvement in business confidence and operating conditions this month thanks in large part to the lifting of some domestic COVID-19 containment measures. This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave that could dampen external demand again,” he said.