Kenya’s private sector witnessed modest improvement in December due to easing inflation and the strong performance of the services sector, according to the Stanbic Bank Kenya Purchasing Managers Index (PMI).
The PMI rose to 48.8 from 45.8 in November 2023. However, the index remained below the 50.0 mark that separates expansion from contraction, signalling that the private sector continued to face challenges for the fourth consecutive month.
During the period, inflation fell to 6.6% in December 2023, within the Central Bank of Kenya (CBK) target range of 2.5%–7.5%, due to lower food and fuel prices.
In addition, the services sector, which includes tourism, transport, and communication, saw increased activity and new orders as demand from domestic and foreign markets improved.
On the other hand, the manufacturing and construction sectors remained weak, as high costs of living and low consumer spending reduced demand for their products and services.
“Similarly, new order inflows dropped at the softest pace in four months and only slightly. According to anecdotal evidence, customer turnout and purchasing power improved amid a softening in inflationary pressures, especially across the services sector,” the survey reads.
“Still, business expectations for the year ahead remain quite weak based on the survey results from respondents,” Christopher Legilisho, an economist at Standard Bank, commented.
On a year-on-year basis, Kenya’s PMI recorded a 5.4% deterioration from the 51.6 recorded in December 2022.
