Kenya PMI March 2021


Kenya: PMI drops to nine-month low, but operating conditions still improve

April 7, 2021

The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Kenya Bank—dropped to a nine-month low of 50.6 in March, from February’s 50.9. While the index still remained above the 50-threshold line—separating expansion from contraction in operating conditions in the Kenyan private sector—the improvement was only marginal.

March’s result was chiefly due to both output and new orders slowing down in activity growth. Demand growth also lost traction, likely due to cash flow problems brought by the pandemic, as households limited spending to essential goods. Firms reported exports lost some momentum in March; As such, output grew at the slowest pace in nine months. However, employment levels continued to improve—albeit only slightly—in March.

On the price front, input prices continued their upward trend, due to higher prices for fuel. Consequently, output prices rose for the third month running, albeit at a more moderate pace than input costs. Lastly, expectations for the coming 12-month period slipped to the third-lowest value in the series history, as uncertainty over the pandemic remains elevated and it could further negatively impact demand.

Commenting on the reading, Kuria Kamau, fixed income and currency strategist at Stanbic Bank, noted:

"This month’s reading indicates a marginal improvement in business activity before the new public health restrictions were announced. Demand growth was negatively affected by a resurgence in COVID-19 which resulted in households conserving cash and prioritizing spending to essential items."

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 4.0% in 2021, which is unchanged from last month, and 4.6% in 2022.

Author:, Junior Economist

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Kenya PMI Chart

Kenya PMI March 2021

Note: Purchasing Managers’ Index. Readings above 50 indicate an overall improvement in business conditions and below 50 an overall deterioration.
Source: Stanbic Bank Kenya and IHS Markit.

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