The level of confidence that business executives have in the economy still remains extremely strong despite increased insecurity threats and dwindling tourism fortunes, a new survey by Standard Chartered Global Research shows.
From the survey released last week, the business sentiment indicator for Kenya surged to a series high of 65.3 in September from 56 in August.
The survey polled up to 200 executives representing different sectors of the economy ranging from manufacturing, services, construction and agricultural firms to answer questions on how they feel about current and future economic conditions.
Respondents were asked whether business activity has increased, decreased, or remained the same, compared with the previous month. They were also asked about their expectations over the next quarter. Overall business conditions firmed to 73 in September (from 61.4 in August), with many companies reporting higher sales and orders.
New orders increased for a third consecutive month, reaching a new series high. Increased export momentum appears to have driven much of this gain, with export orders rising to 74.6 in September from 55.2 in August.“This was the strongest monthly gain in the indicator since the survey began in February of this year,” says the survey.
“The optimism was also broad-based ... the buoyancy of future expectations appears to point to even faster growth ahead. The survey shows supply has been ramped up to respond to rising demand, with production levels reaching a series high in September,” says Standard Chartered Global Research - Africa Managing Director Razia Khan.
“But despite this buoyance, new job opportunities have yet to open up. Perhaps it will require a more sustained upturn before employment trends exhibit a more meaningful upturn.” Future expectations saw a marked shift in September, when 10 of 15 future indicators increased. This was in contrast to August, when a similar number had shown a decrease.
In September, the only declines were recorded in the interest rates paid, order backlogs, inventory, input prices and prices received. With only five of the 31 indicators calculated from the survey below the crucial 50 level, the results are consistent with a pick-up in business activity, it explains.