Kenya: PMI hits second-lowest reading on record in March
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank—dived from 49.0 in February to 37.5 in March, marking the worst print since October 2017 and the second-lowest reading on record. Thus, it dropped further below the 50-threshold, signaling deteriorating business conditions in the private sector.
March’s downturn chiefly reflected the impact of the coronavirus pandemic on business conditions. Activity dropped sharply in March amid falling demand, while new orders decreased at a record rate, with the notable drop was coming from Europe. Consequently, employment decreased for the first time since April 2019. On the price front, input cost inflation accelerated at the quickest pace in nine months on shortages of raw materials, while output charges increased only marginally. Lastly, despite the potential economic fallout from Covid-19, sentiment among firms remained strong.
Commenting on the print, Jibran Qureishi, regional economist for East Africa at Stanbic Bank, noted:
“The sharp drop in the PMI doesn’t really come as a surprise. The negative impact from Covid-19 is quite broad based and is likely to effect various sectors across the economy. […] Arguably, there will be a notable impact on economic output this year as supply chains globally are disrupted and negative demand shocks are felt too. But of course, timing will be everything. The longer the duration, the more acute or severe the impact will be.”