Private sector activity hits 3-month high on further restrictions ease

Activity by Kenya’s private sector hit a three-month high in January as players continue to profit from a further ease to COVID-19 restrictions.

According to data from the monthly issued Purchasing Managers Index (PMI) by Stanbic Bank Kenya, the reading on activity rose to 53.2 points from 51.4 points in December.

The greater activity was anchored on higher output and demand for goods and services by customers as the economy continues to evolve out of crises created by the pandemic.

The expansion of Kenya’s private sector represented by PMI readings above 50 points stretched for a seventh straight month on the back of loosened restrictions to include the resumption of in-person learning.

“Economic activity picked up in January on account of an improvement in customer spending due to improving cash flows in the economy and the re-opening of schools. These factors resulted in an increase in output and new orders,” Stanbic Bank Fixed Income and Currency Strategist Kuria Kamau stated.

Subsequently, businesses have added to their workforce for the fourth consecutive month on the back of rising workloads.

Nevertheless, firms have faced greater inflationary pressures affecting input prices on the back of tax relief reversals to corporation tax and value added tax (VAT) at the start of the year.

However, expectations on growth over the next 12 months picked up for the first time since October and to their highest in seven months on receding COVID-19 infections.

The optimistic findings mirror those contained in the Central Bank of Kenya (CBK) Monetary Policy Committee (MPC) survey conducted last month.

The survey showed increased levels of optimism on economic prospects in the next two months with commercial bank’s indicating the highest rate of optimism at 93 per cent.

Further, respondents indicated expectations of a greater employment rate this year from an improving economic environment including normalizing demand.