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Private sector activity rebounds to two-year high

By Peter Theuri | October 6th 2020

Kenya’s private sector registered stronger output last month owing to the easing of restrictions.

According to the latest Purchasing Managers’ Index (PMI) survey data by Stanbic Bank, the month saw growth hit a two-year high as the government relaxed Covid-19 restrictions.

Posting at 56.3 in September, the headline PMI was up to its highest reading since April 2018, indicating a sharp improvement in the health of the private sector economy.

The index rose from 53.0 in August and marked the third successive expansion since the downturn caused by the Covid-19 outbreak. Readings above 50 signal an improvement in business conditions on the previous month, while below 50 show deterioration.

According to Stanbic, customer demand expanded at the sharpest rate since January 2016, leading to a rise in backlogs. As a result, job numbers were stable after falling in the six previous months.

Nevertheless, future expectations dipped to their lowest since the series began in 2014.

“With the State easing lockdown restrictions during the third quarter of the year, firms saw a release of pent-up demand as clients largely returned to markets,” read the report. "Output levels expanded at a sharp pace in the latest survey period, with companies steeply increasing the volume of inputs purchased.”

Rising demand led to a solid uptick in backlogs of work in September, which saw some firms hire new workers. This countered job cuts at other firms, amid efforts to reduce expenses.

Despite stronger growth, companies were less confident about the 12-month outlook in September. Firms were also concerned that the economy could face a further setback from the pandemic.  

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