Kenya: Private sector PMI falls further in April
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—dropped for the fourth month straight in April to 34.8 from 37.5 in March. Thus, it fell further below the 50-threshold, signaling deteriorating business conditions in the private sector.
The spread of the Covid-19 pandemic was behind April’s downturn. Output declined at a record pace in April amid depressed demand, while sales to foreign customers in particular decreased due to lockdown measures abroad. As such, firms cut employment at the fastest pace on record, while also lowering wages amid cost-saving efforts. On the price front, input cost inflation eased from the previous month which led firms to reduce selling prices. Lastly, although business sentiment fell to the second-lowest level in more than three years, firms remained positive about the economic outlook for the year ahead.
Commenting on the print, Jibran Qureishi, regional economist for East Africa at Stanbic Bank, noted:
” […] It’s safe to say that, at least with anecdotal evidence available so far, the epicentre of the Covid-19 impact on economic activity will be in the second quarter of this year. However, as we have said before, the longer the impact of this shock, the more acute the impact on economic output will be. Thus, estimates on future economic growth are likely to be very dynamic.”