Kenya: PMI decreases in June
The S&P Global Purchasing Managers’ index (PMI) came in at 47.8 in June, down from May’s 49.4. As such, the index fell further below the 50.0 no-change threshold, signaling a sharper deterioration in private-sector operating conditions compared to the previous month.
June’s downturn was driven by faster contractions in output and new orders. The latter fell for the fifth consecutive month amid constrained demand due to high inflation and cash shortages. Average input prices rose at one of the steepest paces on record due to a weak shilling. More positively, currency depreciation was behind the fastest export orders growth since December 2021. Moreover, employment rose further in June as companies remained optimistic on growth.
On the outlook for business activity, Mulalo Madula, economist at Standard Bank, commented:
“In the medium term, growth could be robust, but most of the Finance Bill 2023’s proposals (which could raise both the cost of doing business and the cost of living) could stifle growth in private investment and consumption, which would weigh on the economy. Notably, firms have an improved outlook for the next 12 months, albeit remaining below average.”