Stanbic Bank Kenya Purchasing Managers Index (PMI) for February revealed a strong rebound in business activity attributed to flat COVID-19 infections prompting an increase in customer numbers.
However, cash flow issues resulted in employment dropping for the first time in ten months.
In addition, with input demand rising, increase in tax burdens and global material prices, firms’ overall costs grew at the sharpest pace since September 2018.
The headline PMI leading which signals an improvement or decline in business conditions rose above the 50 points confidence in February to 52.9 points from 47.6 points in January.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
“Domestic demand recovered strongly in February driven by increased customer numbers following a reduction in COVID-19 cases as well as heightened marketing efforts by firms. Firms responded to the higher demand by increasing their output and quantity of purchases significantly during the month,” said Stanbic Bank Kenya Fixed Income and Currency Strategist Kuria Kamau.
Despite rising input prices, purchasing activity expanded sharply and at the quickest pace for 16 months. This helped firms to bolster their stocks amid increased confidence that sales would continue to grow.
The Stanbic Bank Kenya PMI is compiled by IHS Markit, from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies.
Kenya Employment Rate in February Drops First Time in 10 Months
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