Kenya: Conditions improve at stronger pace in December
The Stanbic Bank and S&P Global Purchasing Managers Index (PMI) rose to 51.6 in December from Novembers 50.9. With Decembers data, Kenya consolidated a trend of four consecutive months above the 50.0 neutral mark—which separates an improvement from a deterioration in private-sector business conditions from the prior month.
Decembers upturn was due to output growth and the job creation rate accelerating. However, output did not expand across all sectors; it declined in the construction and services sectors. Additionally, as demand conditions improved, new orders and sales followed suit. In the case of sales, the growth rate reached a 10-month high. Less positively, demand pressures on suppliers limited the fall in supply delivery times.
Mulalo Madula, economist at Standard Bank, commented:
“On the positive side, inflationary pressures appear to be easing, with input costs and output prices rising at a slower pace. Moderate inflation is likely to be one of the few positive factors in the second half of 2023, with fewer supply chain disruptions, favorable weather conditions and lower energy prices. However, idiosyncratic factors, including taxes, are likely to dislocate inflation in the first half of the year.”