Kenyan private sector firms saw a renewed improvement in operating conditions in May, attributed to a solid rise in new orders according to the June Stanbic Kenya Bank Purchasing Managers’ Index.
The Index shows operations by private firms improved to 51.3 last month from 49.3 in April.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
“Activity in the Kenyan private sector recovered in May after the agriculture sector slowdown witnessed over the past couple of months. However, both input and output costs rose sharply in May perhaps due to higher power and transport costs,” Stanbic Bank regional economist Jibran Qureishi said.
The Stanbic Bank Kenya PMI rose above the 50.0 level which demarcates between an expansion and contraction in private sector business conditions following the first contraction since 2017 seen in April. Costs still rising (fuel, transport and food crops). pic.twitter.com/Ar2qhVqEze
— Jibran F Qureishi (@jibz555) June 7, 2019
He added that “In any case, should the government clear arrears owed to the private sector as promised on Madaraka day, private sector activity could benefit from a huge boost.”
The survey shows new orders rose over the review period resulting in an expansion of output levels. However, the increase was marginal and weaker than that seen throughout the last sequence of growth, which ended in March.
Further, it noted that the business sentiment climbed in May, reaching the highest in nearly five years.
“While firms were buoyed by a renewed rise in new orders, they also cited further growth factors over the coming year.”