Kenya’s Private Sector Activity Rebounds in May – PMI

Following the lifting of the partial restrictions that had been imposed in March 2021, Kenya’s private sector returned to growth in May and registered the fastest rate in seven months, said a monthly survey.

Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for the month of May 2021 increased to 52.5 from the 41.5 recorded in April 2021.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

During the month, there was a reported improvement in the new order demand, output and stock purchases, which consequently led to an increase in the number of new jobs created.

“Firms increased their stock of purchases and employment levels so as to increase their output levels to meet the rising demand. Higher input costs, however, resulted in lower profit margins for firms,” Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank commented.

“Firms appear to be increasingly optimistic about the next 12 months as new COVID-19 case numbers continue to fall and vaccinations continue to rise. The future outlook for firms improved for the first time in 4 months.” 

Analysts from Cytonn Investments, however, say they maintain a cautious outlook in the short term owing to the lag in procurement and slowdown in the inoculation of more COVID-19 vaccines.

“The discovery of new variants that are more easily transmissible might lead to another wave of infections and more restrictions that will affect the business environment,” they note. 

Within the country’s FY’2021/2022 Budget Statement, the health sector was allocated KSh121.1 billion from the KSh3.03 trillion budget. Treasury allocated KSh14.3 billion for Covid-19 vaccines and related expenditures.