Kenya: PMI points to expansion in July, despite moderation
August 5, 2015
The composite Purchasing Managers’ Index (PMI), which is produced by Markit and CfC Stanbik Bank, dropped from June’s 55.3 to 54.1 in July, which represented the lowest level in four months. However, the index still rests comfortably above the 50-threshold, which points to expansion in business activity.
According to Markit, July’s slowdown came on the back of weaker growth of output and new business, which are two key categories of the index. Nonetheless, Markit noted that both components still recorded healthy expansions, despite the slowdown. New export business and purchasing activity also slowed in July. Conversely, the rate of job creation was broadly unchanged. Regarding price developments, input costs rose at the fastest pace in 16 months, largely owing to the impact of a depreciated shilling, and output charges rose for a fourth straight month in July.
Jibran Qureishi, Economist at CfC Stanbic Bank commented that, “the third quarter of the year has started off rather slowly […]. New order growth fell to a six-month low, while cost pressures intensified to a 16-month high predominantly due to the pass through effects of the weaker Shilling. We however feel the regulator has been pre-emptive in addressing the concerns around the currency thus far, and if the much needed stability materialises from their actions, the recent cost pressures that have been slowing down growth are likely to be contained.”