Heavy rains, cash crunch dampen festive season sales

Vehicles submerged by flood waters along Nairobi’s Kenyatta Avenue on December 27, 2019. [Phillip Orwa, Standard]

Businesses registered depressed sales last month following the effects of heavy rains and a persistent cash crunch, new data shows.

Data from the latest Stanbic Bank Kenya PMI Survey indicates that while production increased marginally compared to 2018, the onset of floods hampered supplies to many businesses, leading to an increase in the cost of goods during the festive season.

“Sales growth remained sharp, but output increased only slightly as heavy rains delayed activity and input deliveries,” said Stanbic Bank in its report released yesterday.

“Suppliers thus raised prices at a faster pace, while cost-cutting measures meant that job numbers grew at the weakest rate in seven months.”

According to Stanbic, the headline PMI stood at 53.3 last month, marginally higher than the 53.2 posted in both October and November and higher than the annual average of 52.6.

The Purchasing Managers’ Index (PMI) is derived from responses to questionnaires sent to purchasing managers from around 400 private sector companies. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration.

“Heavy rains towards the end of the year have somewhat disrupted trade due to complications associated with transporting goods,” said Jibran Qureishi, Stanbic Bank’s regional economist for East Africa.

“These rains could subsequently prove to be positive for the tea sector over the coming year. That being said, private sector arrears should be the main priority for the government....”