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Kenyan firms witnessed a sharper decline in operating conditions in March, the latest Stanbic Bank-Purchasing Managers’ Index survey indicate.
The headline PMI posted at 37.5, down from 49.0 in February. The second-worst record in the survey’s history
“The sharp drop in the PMI doesn’t really come as a surprise. The negative impact from Covid-19 is quite broad-based and is likely to affect various sectors across the economy,” notes Jibran Qureishi, regional economist East Africa, StanbicBank.
During the period, demand for inputs was noted to fall at the quickest pace since late-2017. However, shortages of raw materials contributed to a faster rise in overall input costs.
The tourism and floriculture sectors were hit the hardest due to global cross border travel restrictions and waning luxury spending in markets such as Europe.
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“Sourcing raw materials from markets such as China has also been cumbersome. Yet, Chinese factories are likely to restart production as early as mid-April which may somewhat soften this negative impact. Arguably, there will be a notable impact on economic output this year as supply chains globally are disrupted and negative demand shocks are felt too. But of course, timing will be everything. The longer the duration, the more acute or severe the impact will be,” he said.
“Looking ahead, the overall level of sentiment in the Kenyan private sector remained strong, despite the impact of the pandemic,” the survey states.
Companies cited plans to widen products and services and open new branches, though some respondents noted these plans were on hold until after the virus has been brought under control.
