Kenya: PMI edges down to the lowest in 16 months
Activity in the Kenyan private sector grew at a slightly weaker pace in March, reflected by a fall in the Purchasing Managers’ Index (PMI), produced by IHS Markit and Stanbic Bank, from 51.2 in February to 51.0 in March—the lowest print since November 2017. Thus, the index edged closer to the critical 50-point threshold that separates expansion from contraction; it has been above the mark since December 2017.
The latest reading was underpinned by a softer upturn in output, owing to weaker domestic demand. Moreover, overall growth in new orders weakened, despite a sharp rise in new business from overseas markets. The slowdown led firms to increase their in-take of workers only marginally. Meanwhile, input cost inflation softened markedly to an over two-year low; consequently, output prices remained stable from the previous month. Despite the moderation, business sentiment remained robust, climbing to the highest in more than four years on expectations on an improvement in demand.
Commenting on March’s print, Jibran Qureishi, Regional Economist E.A at Stanbic Bank stated:
“The drop in the PMI doesn’t really come as a surprise as agricultural productivity is usually weaker in the first quarter. However, in addition to this, the ongoing trade spat with neighbouring Rwanda hasn’t helped either. Nonetheless, as the long rains commence probably from April, higher output from the agriculture sub-sector is likely to underpin private sector activity.”