Business output falls in January

The private sector struggled in January as businesses contended with fewer orders and poor weather, a new survey shows.

According to the Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI), private sector activity fell to 49.7 in January from 53.3 in December, a level last seen in April 2019.

Readings above 50 indicate improvement in business conditions, while a score below 50 represents decline.

The report said poor weather conditions for the better part of 2019, where torrential rains hit the country following a prolonged period of drought, hampered business, leading to low output in the sharpest decline since October 2017.

Constrained cash flow in the economy in January meant that households were not able to demand a lot of products from the market.

“Overall activity levels contracted solidly at the start of the year, as firms reported that a lack of money at households led to much softer demand pressure,” said Stancib in the survey report.

Jibran Qureishi, regional economist for East Africa at Stanbic Bank, said the repeal of interest rate caps would help improve business conditions going forward.