Activity in Kenya’s private sector accelerated to a five-month high in October as output growth strengthened and new business continued to grow despite an increase in input costs, a monthly survey said Thursday.
The index rose to 51.4 in October from 50.4 in September according to the monthly Stanbic Bank Purchasing Managers Index (PMI).
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
During the period, the overall rate of input cost inflation quickened for the second month running, on higher purchase prices, though staff fees also continued to rise.
“Overall input costs rose in the Kenyan economy at the start of the fourth quarter,” said the report which estimated that 10 per cent of businesses recorded a surge in costs.
“Weak material supply, higher VAT and rising energy prices combined to push total input costs higher in October, with the latest mark-up the quickest since July. Staff salaries were also up, but only slightly overall,” the report disclosed.
As a result, firms often passed additional costs through to their clients to protect their profit margins.
“The one-year outlook remains relatively low with most firms expecting output to remain the same due to the lingering effects of the Covid-19 pandemic,” said Kamau Kuria, Stanbic Bank’s Fixed Income and Currency Strategist.
The central bank remains optimistic that the economy will expand by 6.0 per cent in 2021 from the 0.3 per cent contraction in 2020.
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