Kenya: PMI rebounds in July
August 5, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—jumped to 54.2 in July, from 46.6 in June. The result marked the strongest reading since June 2019 amid further easing of containment measures. As a result, the index climbed above the 50-threshold pointing to the first uplift in business conditions in seven months.
July’s upturn was largely fueled by a rebound in new business on the back of recovering consumer demand at home and abroad. In turn, output expanded at the fastest pace since May 2018, while purchasing activity rose as firms looked to accumulate stocks in anticipation of demand returning to normal levels. That said, employment numbers continued to fall in July, albeit at the weakest rate in five months. Meanwhile, input costs rose due to supply shortages of some raw materials, with firms raising output charges as a result. On a less positive note, business confidence weakened due to Covid-19-realted uncertainty ahead.
Commenting on the reading, Jibran Qureishi, regional economist at Stanbic Bank, said:
"Notably the removal of county travel restrictions supported output and business sentiment in July. This enabled firms to receive inputs much quicker, as supplier delivery times improved. In any case, firms remain wary of the uncertain outlook and thus future expansion plans are still not firmed up.”
Author: Almanas Stanapedis, Economist