Kenya: PMI increases in September to highest level since April 2018
October 5, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—increased to 56.3 in September from August’s 53.0. Consequently, the index moved further above the 50-threshold, marking the third consecutive month of improved business conditions since the outbreak of the pandemic, and the highest reading since April 2018.
September’s reading signals a notable improvement in the private sector and health of the economy. New orders grew as customer demand expanded at the sharpest rate since January 2016, thanks to the further easing of restrictions. Meanwhile, foreign orders, mainly from Europe and the Middle East, continued to rise, showing a further improvement in external demand. As such, total sales increased at the strongest rate since January 2016, with output levels growing significantly. Moreover, employment levels finally stabilized after six consecutive months of rising job losses. All said, however, September’s sentiment reading marked the lowest in the series, showing that companies had less confidence in the outlook for the next 12 months, likely over fears stemming from the uncertain evolution of the pandemic.
Commenting on the reading, Jibran Qureishi, regional economist at Stanbic Bank, said:
"The PMI indicated a further improvement in [...] operating conditions this month, thanks in large part to the lifting of some domestic Covid-19 containment measures. This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave globally that could dampen external demand again.”
Author: Marta Casanovas , Junior Economist