Kenyan private sector firms report a significant strengthening of their business confidence, reaching a 13-month high in April.
According to the latest Stanbic Group Purchasing Manager’s Index (PMI), their optimism was driven by planned investments and growth expectations, particularly in the service sector.
The PMI reached 50.1, an improvement from 49.7 in March but still lower than February’s reading of 51.3.
“Expectations towards output over the next 12 months continued to recover strongly from February’s survey-record low, with overall sentiment the strongest since March 2023. Confidence reflected planned investment in marketing, capacity upgrades, new branches, recruitment and growth in other African markets,” the survey noted.
During the period, orders improved, likely driven by easing inflationary pressures in most sectors.
Kenya’s inflation rate fell for the third consecutive month, reaching 5% year-on-year in April (down from 5.7% in March). The most significant declines were seen in the wholesale and retail sectors. However, the agriculture and construction sectors still experienced rising price pressures.
Despite concerns about ongoing floods potentially impacting the second quarter, business owners remain optimistic about future output, with expectations continuing to recover from a low point in February.
“We share these concerns and worry that growth will slow in Q2:24 because of the widespread devastation and disruptions caused by the heavy rain,” commented Christopher Legilisho, an economist at Standard Bank.
“On expectations for the next 12 months, business optimism increased to a 13-month high as firms foresee growth, led by the services sector.”
Kenya is grappling with the aftermath of its most catastrophic wet season in years. Since March, torrential rains have battered the country, unleashing devastating floods.
The relentless downpours have claimed the lives of at least 228 people, displacing thousands from their homes.
Subsequently, the educational sector has also been impacted, with nearly 2,000 schools sustaining damage and the remaining ones forced to shut their doors indefinitely by the government.
