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Private sector downturn slows down in June

By Macharia Kamau | July 4th 2020 at 00:00:00 GMT +0300

Relaxed curfew hours fell short of putting the economy back on track with continued decline, the Stanbic Bank Purchasing Managers’ Index (PMI) shows.

The index points to a gloomy second half of 2020, reeling from the far-reaching impact that the coronavirus pandemic has had on businesses.

It reveals that the economy deteriorated in June although it slightly performed better compared to May.

Job losses were slowest in June. Output by companies as well as orders they are receiving for their products are still on the decline.

The headline PMI stood at 46.6 in June, a notable improvement from 36.7 in May. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

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Stanbic noted that this signals a far softer - but still solid - decline in business conditions among Kenyan firms.

“The Kenyan private sector economy registered a further deterioration in business conditions during June, latest PMI data showed, as output and new orders declined again amid the coronavirus pandemic,” said the PMI report.

Jibran Qureishi, Stanbic’s Regional Economist for East Africa noted that despite extended curfew hours, and increase in demand of Kenyan exports in Europe, the impact of coronavirus will be a drag for the economy over the next half year.

"Private sector activity fell at a slower rate in June, albeit from a marked level in April. A resumption in cargo flights in addition to the gradual re-opening of economies is underpinning external demand.

However, the damage done by Covid-19 could last for the better part of the next six months,” he said.

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