Kenya PMI July 2016


Kenya: PMI picks up in July

August 3, 2016

The composite Purchasing Managers’ Index (PMI), which is produced by IHS Markit and CfC Stanbic Bank, recovered from June’s record-low of 51.5 to 53.3 in July. Thus, 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.

July’s improvement mainly reflected that output and new business recorded notable increases. Meanwhile, new export orders did not grow and the pace of job creation increased only marginally. As for price developments, input prices and output charges both increased at a moderate pace.

According to the survey report, “the Kenyan private sector regained momentum in July after dropping to a survey record low in the previous month. Indeed, the chief driver of this rebound was a sharp rise in new orders. This was largely down to robust domestic demand as export growth trended sideways probably due to suppressed global growth. Uncertainty surrounding the impact of the Brexit vote could continue to weigh down export growth in coming months. Firms also voiced concerns around cost pressures owing to the newly introduced tax measures in the budget, however these pressures could be relatively muted going forward as international oil prices continue to remain benign and the exchange rate also remains broadly stable. Nonetheless, the government’s expansionary fiscal policy could begin to kickstart economic activity and support growth in the second half of 2016.”

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 Chart

Kenya PMI July 2016 1

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 IHS Markit.

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