Kenya PMI June 2016

Kenya

Kenya: PMI falls to record-low in June

July 5, 2016

The composite Purchasing Managers’ Index (PMI), which is produced by Markit and CfC Stanbic Bank, fell from May’s 54.0 to 51.5 in June, marking the lowest reading on record. 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 in January 2014.

June’s setback mainly reflected that output and new orders grew at a slower pace than in May. The pace of job creation and firms’ pace of input buying also both decelerated in May. Regarding price developments, input prices recorded a moderate increase, while output charges barely rose.

According to the survey report, “the Kenyan private sector continued to post growth in June. Yet, the decline in the PMI signifies a material slowdown in the pace of growth in economic activity in the private sector. Indeed, the seasonally adjusted reading of 51.5 was the lowest since compilation of the index commenced. While the pace of growth in output decelerated, as did that of new orders, backlogs of work rose at a survey-record pace. Some survey respondents pointed to escalating political unrest as a contributing factor to the slowdown in the pace of growth in activity. But ebbing demand was also evident. The results of the Brexit vote, by exacerbating uncertainty, could crimp private sector activity in coming months.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 6.8% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, panelists expect fixed investment to grow 7.3%.


Author: Teresa Kersting, Economist

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Kenya PMI June 2016

Note: Markit Purchasing Managers’ Index (PMI) Composite Output. A reading above 50 indicates an expansion in business activity while a value below 50 points to a contraction.
Source: CfC Stanbic Bank and Markit.


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