Kenya: PMI declines notably in November, but remains in expansionary territory
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—dived to a five-month low of 51.3 in November from October’s record high of 59.1. Consequently, the index moved closer to the 50-threshold, suggesting that operating conditions in the Kenyan private sector improved only modestly in November.
November’s downturn was broad-based. Soaring numbers of new Covid-19 cases dented growth in new orders and sales as consumer demand felt the brunt of newly imposed lockdown measures. Moreover, export orders growth also slowed due to lingering restrictions in Europe. Consequently, job creation came to a halt in November as firms’ revenues declined. In terms of prices, inflation fell for the first time in six months, while output prices continued to decrease, reflecting discounts made in an effort to boost sales. Lastly, the outlook for business activity slumped to a record low in November on fears of prolonged restrictions due to the pandemic, which could dampen activity further ahead.
Commenting on the softer growth rate in November, Kauria Kamau, fixed income and currency strategist at Stanbic Bank, noted:
“Containment measures that were re-instilled last month were less stringent than before. However, the pace of the improvement in business activity slowed down partly due to a resurgence in Covid-19 cases. Additionally, firms noted that the reintroduction of lockdowns in parts of Europe also hurt external demand for their goods.”