Kenya: PMI falls to 15-month low in February
March 5, 2019
Business conditions in the Kenyan private sector improved only modestly in February, with activity in the sector growing at the weakest pace in 15 months. The Purchasing Managers’ Index (PMI), produced by IHS Markit and Stanbic Bank, declined to 51.2 in February from 53.2 in January. Thus, the index remained above the crucial 50-point threshold that separates expansion from contraction, where it has been now since December 2017.
February’s reading reflected slower growth in overall output and new orders due to softer domestic demand, which eroded the gains made from stronger sales to overseas markets. Firms increased their payroll numbers, nevertheless, and backlogs of work declined for the third month running. Moreover, input cost inflation cooled in the month, which prompted firms to keep their output prices broadly unchanged.
Commenting on the latest reading, Jibran Qureishi, Regional Economist E.A at Stanbic Bank stated:
“The first quarter of the year is usually associated with dry weather conditions and hence it is not surprising that the PMI is falling. This is more of a cyclical trend and as the long rains commence towards March and April, activity generally tends to recover boosting domestic demand. That being said, on a positive note, new export orders remained robust in February courtesy of the valentine flower sales to Europe. This subsequently lent support to the Kenya Shilling.”