Kenya’s private-sector services activity shrank in April as inflation and political unrest hit demand, a survey showed on Friday.
Activity levels and input purchases also fell sharply, but employment numbers continued to rise.
On the other hand, input cost pressures showed further signs of having peaked, dropping to their lowest recorded in 2023 so far, though remaining steep.
Stanbic Bank Kenya’s Purchasing Managers’ Index (PMI) fell to 47.2 from 49.2 in March. The index also signalled a solid and faster decline in the health of the private sector economy at the start of the second quarter.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
“The cost-of-living crisis continued to hinder business performance, according to survey panellists, while an associated bout of political unrest led to a marked drop in client demand,” the survey said.
“The outlook for output for the upcoming 12 months significantly decreased, reaching the lowest level since the survey’s inception. This was largely due to worries about the effects of high inflation, as power tariffs were increased by around 19% in April. But then again, overall year-on-year inflation is likely to slow, having fallen to 7.9% in April from 9.2% in March, as statistical base effects continue to unwind, although underlying costs for firms are likely to remain elevated,” Mulalo Madula, an Economist at Stanbic Bank, said.
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