Growth in Kenya's private sector activity slowed in August, hurt by firms laying off staff to help cut their costs and preserve cash in the wake of the Covid-19 pandemic. FILE PHOTO | NMG
Growth in Kenya's private sector activity slowed in August, hurt by firms laying off staff to help cut their costs and preserve cash in the wake of the Covid-19 pandemic, a new survey showed
The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI)-- a monthly measure of private sector activity — fell to 53.0 from 54.2 in July, which was highest level was the highest since June last year.
It held above the 50.0 mark that separates growth from contraction. It signals growth in business deals for the second month in a row after Kenya announced a phased reopening of the economy.
Growth in Kenya's private sector activity slowed in August, hurt by firms laying off staff to help cut their costs and preserve cash in the wake of the Covid-19 pandemic, a new survey showed
The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI)-- a monthly measure of private sector activity — fell to 53.0 from 54.2 in July, which was highest level was the highest since June last year.
It held above the 50.0 mark that separates growth from contraction. It signals growth in business deals for the second month in a row after Kenya announced a phased reopening of the economy.
“A second consecutive month of growth continues to indicate that the private sector is moderately emerging from the trough in April,” Stanbic Bank head of Africa research Jibran Qureishi said in the PMI report.
“That said, the employment sub-component index still remains below the 50 level, largely reflecting firms scaling back on wage costs. Weaker jobs growth indicates the underlying challenges the road ahead presents, even as business confidence has improved over the past two months."
The survey suggested business activity was helped by the easing of movement restrictions countrywide that had been in place to curb the spread of COVID-19.
The government removed movement restrictions into and out of Nairobi, Mombasa and Mandera counties in July, allowed local commercial air passenger travel and resumed commercial international travel in August.
This helped lift demand for goods and services which remained solid in August, with orders from abroad jumping at a record pace on progressive easing of lockdowns largely in Europe.
Domestic production and sales were, nonetheless, softer last month compared with July as firms passed higher cost of inputs which hit a four-month high onto consumers, slightly raising selling prices.
Companies started reporting falling sales ahead of Kenya imposing restrictions to curb the spread of coronavirus which in touched off a streak of layoffs, pay cuts and unpaid leave from April.
The impact of the pandemic has battered the economy, with the Treasury projecting growth will slow to 1.8 percent in the worst case scenario this year from 5.4 percent in 2019.
About 1.72 million workers lost jobs in three months to June when Kenya imposed coronavirus-induced lockdown that led to layoffs and pay cuts.
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