Kenya: PMI inches up in December
January 6, 2021
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—inched up to 51.4 in December, from November’s five-month low of 51.3. As such, the index moved slightly further above the 50-threshold, reflecting that operating conditions in the Kenyan private sector improved only modestly in December.
December’s modest improvement was largely due to quicker growth in new orders, supported by loosened Covid-19 restrictions. Employment levels grew for a third month running supporting the mild increase in output—which grew at the softest pace in six months—although the job creation rate was only marginal. On the price front, input prices rose at the quickest pace since March as a consequence of global supply chain disruptions brought about by the pandemic and input shortages. While some firms passed the higher costs to customers, others opted to offer discounts to attract new clients, prompting output prices to fall for the second month running. Lastly, the outlook for business activity fell below November’s reading in December, thus marking a new record low in December, as firms worry about the impact of the pandemic on future activity.
Commenting on the result and on the outlook, Kuria Kamau, fixed income and currency strategist at Stanbic Bank, noted:
"The modest month-on-month improvement in the Stanbic PMI indicates that the pace of the post pandemic recovery is slowing down. […] This slowdown was inevitable following the significant improvements in economic activity witnessed in October after the relaxation of public health restrictions. Furthermore, a resurgence in Covid-19 cases as well as the re-introduction of lockdowns in some international markets has lowered expectations for the post pandemic recovery in 2021.”
Author: Marta Casanovas , Junior Economist