Kenya: PMI climbs to highest level on record in October
November 10, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—climbed to 59.1 in October from September’s 56.3. As such, the index rose further above the 50-threshold, marking the fourth month running of improved business conditions since the outbreak of the health crisis, and the highest reading since the series began in January 2014.
October’s print largely reflected strong growth in output and new orders, with both also expanding for the fourth month running, on the back of strengthening aggregate demand as Covid-19-related restrictions were further eased. Consequently, the job creation rate was the strongest in 11 months as firms hired more staff, ending the seven-month period of job cuts. Lastly, businesses became more optimistic in October on an improved outlook for activity ahead, following September’s record-low sentiment reading.
However, Jibran Qureishi, head of Africa research at Stanbic Bank, called for caution ahead, noting:
"With lockdowns being reimposed in some major international trading partners, new orders could ease over the coming months especially if external demand falters. Moreover, with Covid-19 cases also on the rise nationally, the risk of further containment measures poses downside risks to economic activity.”
Author: Marta Casanovas , Junior Economist