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Private sector activity grows for fourth month in a row

By Macharia Kamau | September 4th 2021

An increase in domestic demand was witnessed in most key sectors. [Elvis Ogina, Standard]

Business conditions in the country’s private sector have improved marginally for the fourth month in a row, attributed to a rebound in economic conditions after last year’s battering by Covid-19.

The improved conditions were against new orders growing at a faster rate as well as employment going up. This saw private sector players increase orders to meet growing orders according to Stanbic Bank’s Purchasing Manager’s Index (PMI).

Covid-19 is standing in the way with optimism among executives across various firms sinking, with business confidence slipping to a near-record low. The respondents to the survey do not also expect significant growth in output by local firms over the next 12 months.

The index noted that the rate of growth picked up as firms saw a faster expansion in new business in August compared to July. PMI is among the widely accepted barometers used to gauge the health of the private sector.

The headline PMI stood at 51.1 in August from 50.6 in July to remain above the 50 neutral mark. Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50 show a deterioration.

“In August, the pace of the recovery in business conditions accelerated; driven by higher levels of demand and employment,” said Kuria Kamau, the Fixed Income and Currency Strategist at Stanbic Bank.

He noted that an increase in domestic demand was witnessed in most key sectors except manufacturing while rising orders from clients in the Middle East and Europe boosted overall export demand.

Firms have been unable to raise their output to meet all the additional demand. “Firms appear to be preparing to increase their output to meet this demand as evidenced by the higher employment levels and quantities of purchases reported in August,” he said.

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