Kenya’s private sector activity contracted slightly in March after a six-month slump, according to the Stanbic Bank Kenya Purchasing Managers’ Index (PMI).
The PMI reading fell to 49.7 from 51.3 in February, indicating a deterioration in business conditions.
The slowdown was attributed to lower new orders and cash flow problems faced by some companies.
“Output contracted modestly, which survey panellists attributed to lower new order intakes and cash flow problems,” Stanbic Bank said in the survey.
“The decline in new orders signalled by the survey was only fractional, however, as firms reported an easing of price pressures that supported customer spending.”
However, the survey found some positive signs. For instance, input costs rose at their slowest pace in over three years, moderating selling prices, which could boost customer spending.
In addition, businesses increased their inventories in anticipation of future demand.
The decline in new orders was marginal, suggesting lower inflation might encourage customer spending in the coming months. The stronger Kenyan shilling and lower fuel prices also helped reduce import costs and overall inflation.
While the short-term outlook is uncertain, Kenyan businesses seem cautiously optimistic about future growth, particularly in the services and retail sectors.
