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Kenya PMI June 2024

Kenya: PMI plummets in June

The Stanbic Bank Kenya PMI fell to a seven-month low of 47.2 in June from 51.8 in May. As a result, the index moved below the 50.0 no-change threshold, and signaled a deterioration in private-sector operating conditions compared to the previous month.

A sharp fall in business activity dragged on June’s reading, attributed to widespread economic challenges and the negative impact of protests and policy uncertainty on sales. Moreover, new business intakes dropped at the fastest rate since November 2023, job creation slowed, and purchasing activity and inventories decreased. That said, the manufacturing sector registered an increase in new business intakes, limiting the downturn.

Input prices in the Kenyan economy rose for the first time in three months in June, following a near-record decrease in the previous survey period, with higher taxation on products commonly noted by businesses as driving up costs. Despite this, the rate of input price inflation was modest, leading to only a slight rise in output prices. Lastly, business expectations towards future activity slipped to a four-month low, as economic challenges led firms to show less optimism towards their sales and output forecasts.

Christopher Legilisho, economist at Standard Bank, commented:

“In June, momentum in private sector activity declined, reflecting several concerns, top of the list being the proposed increase in taxes via the Finance Bill 2024, and the widespread protests in response, with unrest in Kenya restraining output and new business because customers delayed spending decisions in the face of such uncertainty.”

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