Kenya PMI May 2016


Kenya: PMI ticks down in May

June 6, 2016

The composite Purchasing Managers’ Index (PMI), which is produced by Markit and CfC Stanbic Bank, fell slightly from April’s 54.8 to 54.0 in May. Nevertheless, 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.

May’s modest setback mainly reflected that output and new orders grew at a slower pace than in April. Meanwhile, the pace of job creation and firms’ pace of input buying both accelerated in May. Regarding price developments, both input prices and output charges picked up in May.

According to the survey report, “conditions within the Kenyan private sector continued to improve, however at a slower pace. Judging by historical standards the PMI has expanded much more softly than previous quarters. The recent easing of the monetary policy stance is thus a good move in order to kick start economic activity. On a positive front, job creation looks set to improve as backlogs of work increased for a seventh straight month. Costs for firms have also been on upward trend over the past couple of months despite the stable exchange rate as attracting labour has become more competitive forcing firms to outbid each other.”

FocusEconomics Consensus Forecast panelists expect fixed investment to expand 7.8% in 2016, which is down 1.7 percentage points from last month’s forecast. For 2017, panelists expect fixed investment to grow 7.5%.

Author: Teresa Kersting, Economist

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Kenya PMI Chart

Kenya PMI May 2016

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 Markit.

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