Kenya: Private sector PMI rises in May
June 4, 2020
The Purchasing Managers’ Index (PMI)—produced by IHS Markit and Stanbic Bank Kenya—rose to 36.7 in May from 34.8 in April. Thus, it remained mired below to 50-threshold, signaling deteriorating business conditions in the private sector.
May’s result reflected continued downturns in the Kenyan private sector, with output and export sales falling amid downbeat demand and travel restrictions due to the Covid-19 pandemic. Consequently, firms were forced to cut employment, with the rate of job shedding the quickest on record. On the price front, input prices fell for the first time since January 2015 in May reflecting efforts to cut employment costs and purchases. As such, output charge inflation dropped at the fastest rate on record amid firms’ efforts to mitigate the fallout from the virus. Lastly, sentiment among Kenyan firms deteriorated in May, with the economic outlook for the year ahead falling to the worst since August 2016.
Author: Hanna Andersson, Economist