Kenya: PMI drops to five-month low in March
April 5, 2016
The composite Purchasing Managers’ Index (PMI), which is produced by Markit and CfC Stanbic Bank, fell from February’s 55.2 to a five-month low of 52.6 in March. Nevertheless, the index remained above the 50-threshold, which points to expansion in business activity. The index has been in expansionary territory since the survey was launched.
March’s reading reflects that both output and new orders expanded at a notably slower pace than in March. Adding to this, the pace of job creation and input buying also eased. Conversely, backlogs of work increased in March. As for price developments, input costs rose only slightly while output charges moderated for the first time in a year.
According to the survey report, “after a bright start to the year, the Kenyan private sector has shown signs of slowing momentum with the CfC Stanbic PMI falling abruptly to a five-month low. Although the headline number still suggests that business conditions are improving, it is at a much slower pace in comparison with the previous three months. Expansions of output and new orders eased sharply and we suspect this is chiefly due to subdued global growth rather than soft domestic demand. On a positive note, costs for most firms eased in March largely on the back of declining oil prices and a more stable exchange rate. Given the favourable macroeconomic conditions we suspect this slowdown could prove to be a temporary speed bump.”