Kenya: PMI moderates in July, but remains in expansionary territory
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Kenya—dropped to a three-month low of 50.6 in July, from June’s 51.0. While the index remained above the 50-threshold, it pointed to a moderating improvement in operating business conditions in the Kenyan private sector from the previous month.
July’s slowdown was chiefly due to both output and new orders growing at more moderate paces in the first month of the third quarter. Consequently, the job creation rate slowed to a three-month low. On the price front, input costs rose at the quickest pace in over a year—largely due to higher costs for fuel and material shortages, as well as higher import taxes—which were partly passed on to customers in a bid to maintain profit margins. Lastly, sentiment hit a five-month high in July, although it remained below the survey’s long-term average.
Kuria Kamau, fixed income and currency strategist at Stanbic Bank, reflected on July’s data:
“Domestic demand improved by the second slowest pace since the lifting of public health restrictions after the first wave of pandemic, with some firms reporting a drop in customer numbers. Firms in agriculture, construction and services witnessed an increase in demand and output while those in manufacturing and trade saw declines.”