Private sector activities fall to 3-month low as exports dip
Frosty weather conditions hit Kenya’s sales abroad last month even as global recession lies in wait, new data shows.
The latest Stanbic Bank’s Purchasing Managers’ Index (PMI) - a survey that measures the health of the private sector - shows that there was a slow growth in exports in August with the headline PMI dropping to 52.9 from 54.1 in July. This was the lowest level since May this year.
Over the month, exports experienced the slowest growth in 21 months, with tea earnings taking a tumble.
"The rate of growth slowed marginally from July in part due to sales from abroad rising at the weakest rate in the current 21-month sequence of expansion," said the Stanbic report in part.
Regional East Africa Economist at Stanbic Bank Jibran Qureishi said the slowdown was a "seasonal concern", with the tea-importing countries such as Pakistan experiencing frosty cold weather.
In the first three months of this year, the value of total exports declined to Sh156.9 billion from Sh161.7 billion during the same quarter of last year, with the Kenya National Bureau of Statistics (KNBS) citing a reduction in the value of exports to the Far East.
As a result, national output, or GDP, grew by a slower rate of 5.6 per cent in the first quarter of this year compared with 6.5 per cent in the same period last year.
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While ruling out the impact of an impending global recession, particularly as China and the United States continue to engage in a trade war, Mr Qureishi noted that a slowdown in the global economy remained a broader medium-term concern.
The survey showed that companies reported a sharp rise in new orders over the month, riding on increased client numbers and larger purchases.
However, others had cash flow issues, which hampered businesses’ ability to keep up with new orders and led to increased backlogs for the fourth month running.
“For the first time since May, firms have once again voiced concerns around cash flow issues. To ensure inclusivity in economic growth, urgent reforms ought to be conducted on improving accessibility to credit for companies,” said Mr Qureishi.
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Stanbic BankPurchasing Managers’ IndexPMI