Kenya’s private sector activity rebounds after anti-government protests

For the first time since May, Kenya’s private sector activity increased last month as a result of the recent anti-government protests abating. According to the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) Report, August saw a little improvement in business conditions as the effects of the protests subsided and businesses were able to largely resume regular operations. The PMI increased from 43.1 in July to 50.6 in August, marking the first time since May, when the sector’s activity grew, that it has been above the 50 no-change line. A PMI reading of less than 50 denotes a decline and worsening of business activity, while the above figure implies expansion and improvement.
In August, Kenyan companies increased their output for the first time in three months. According to Stanbic, the growth rate was moderate and the second-fastest in more than a year and a half. “There was a slight increase in business conditions in the Kenyan private sector as indicated by the reading, but it was not a significant one.” According to the PMI data, activity levels increased for the first time since May, and new orders somewhat increased as well. According to the bank, businesses also raised their input purchases at the same time as employment fell for the first time this year.
 
“In August, new orders to Kenyan companies increased as well, albeit very marginally. Some businesses persisted in highlighting their clients’ low purchasing power. Nevertheless, businesses increased their input purchases—the first increase in three months—the survey stated.Respondents to the study stated that increased import duties and tax burdens caused cost pressures on private sector companies to worsen in August.”August saw a decline in business expectations, suggesting that companies were less optimistic about output over the ensuing year. The percentage of respondents who were sure that output levels would rise over the next 12 months was just 5%, according to Standard Bank economist Christopher Legilisho.