Kenya: PMI falls into contractionary territory in March
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 49.7 in March from 51.3 in February. As a result, the index fell below the 50.0 no-change threshold and signaled a deterioration in private sector operating conditions compared to the previous month.
March’s decline was primarily due to business output slipping into contraction amid cash flow issues and a decrease in new orders. Meanwhile, inventories and employment continued to expand, although the latter did so at a milder pace than in February.
Turning to prices, input costs rose at the slowest pace in over three years amid a stronger Kenyan shilling and lower fuel prices. Similarly, output charges increased at the softest clip since January 2022. Lastly, business sentiment rose to a four-month high—following February’s record low—due to lower inflation trends and expansion plans.
Christopher Legilisho, economist at Standard Bank, commented on customer demand:
“Firms noted that, despite lower inflation, a stronger shilling against the USD in March, and increased marketing efforts, cost-of-living pressures are still subduing consumer demand.”