Kenya’s private sector activity declined in October as elevated price pressures, and higher operating costs continued to dampen demand and output, according to Stanbic Bank Kenya Purchasing Managers’ Index.
The latest Purchasing Managers’ Index survey shows that October registered a reading of 50.2, down from a seven-month high of 51.7 recorded in September.
During the period, there was a record rise in purchase costs in October, driven by rising fuel costs, a weaker currency, and material shortages.
The Purchasing Managers’ Index readings above 50.0 signal growth in business activity, while those below that point to a contraction.
Mulalo Madula, an Economist at Standard Bank, says October’s PMI continued to signal an improvement in business conditions, albeit with a loss of momentum compared to September.
“The record increase in purchase costs led companies to raise their output charges sharply in October. Moreover, the pace of inflation accelerated to a four-month high,” the PMI said.
Madula warns that if price pressures persist and firms continue to pass on a higher share of rising input cost burdens to output charges, demand may weaken in the short to medium term.
“This is likely to slow the overall rate of improvement in Kenya’s business environment,” Madula said.
