July private sector activity eases off

Kenya’s private sector activity was little changed in July, as firms struggled to cope with increased demand, a survey showed yesterday.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services came in at 54.1 in July, slightly lower from 54.3 in June.

Any reading above 50 indicates growth. A move by the government to start paying outstanding bills — often long-delayed — to its suppliers of goods and services had boosted sentiment during the month, survey respondents said.

In June, the National Treasury said the State would make it a priority to pay Sh10.9 billion owed to suppliers by the end of that month.

“We don’t think it’s a coincidence that the government has begun releasing some withheld payments during this period that is subsequently boosting business confidence,” said Jibran Qureishi, regional economist for East Africa at Stanbic Bank.

The move was also “further emboldening firms to increase their purchasing activities”, Qureishi said.

He cautioned however that the State needed to keep paying all those bills for the benefits to trickle down through the wider economy.

“It will be paramount for the clearance of private sector arrears to be consistent in order to continue anchoring the private sector,” he said.