Kenyan private sector activity rose sharply in January, the seventh consecutive month of growth since the COVID-19 outbreak, a survey showed on Thursday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) reading was at 53.2 in January, up from 51.4 in December to the highest reading for three months.
“Output and new orders both rose sharply in the new year, with the growth of each quickening to the fastest since last October. Firms highlighted that the reopening of businesses and improved cash flow in the economy helped to generate higher customer spending. Export sales also continued to rise, although the upturn slowed to the weakest for seven months,” part of the survey reads.
However, the report showed that cost inflation accelerated in January, mainly due to a hike in VAT to 16% that led many suppliers to increase their prices. Raw material shortages and rising demand for inputs also contributed to an uptick in purchase costs, which rose at the quickest rate since September 2018.
“Economic activity started 2022 on a subdued. While export demand grew marginally, domestic demand fell significantly as client spending was negatively affected by rising inflation and a resurgence in Covid-19 due to the Omicron variant,” Kuria Kamau, fixed income and currency strategist at Stanbic Bank said.
“As a result of the lower demand, firms were forced to reduce their output and purchases of raw materials for the first time since April 2021. Hiring continued but at the slowest pace in six months,” Kamau said.