Kenya’s private sector activity steadied in April compared with a month earlier on back of easing inflationary pressures amid a stable currency, findings of a closely-watched survey suggested.
Stanbic Kenya Purchasing Managers Index (PMI) — a measure for private sector activity such as such as output, new orders and employment— rose marginally to 50.1 compared with 49.7 percent in March.
This signalled stability in month-on-month business deals because PMI readings above 50 signals growth, while levels below that mark points to a contraction.
“Output and new orders were neutral during the month as firms reported a balanced inflow of new business despite concerns from some businesses about the heavy rainfall across the country,” Christopher Legilisho, an economist with South African-based Standard Bank, the parent firm of Stanbic Bank, wrote in the PMI report on Monday.
“There was a notable increase in jobs created, quantities purchased, and inventories held by firms during the month, reflecting increases in existing workloads and prospects of new business.”
Inflation, a measure of increase in cost of goods and services over the previous year, grew at softest pace in 42 months in April at 5.0 percent on falling food and energy costs, according to the Kenya National Bureau of Statistics.
The shilling, on the other hand, was largely stable, exchanging at 133.28 units against the globally bullish US dollar at the close of the month compared with 133.80 units at the start — a marginally depreciation of 1.12 percent.
The easing inflationary pressure amid the strengthening shilling in a net import economy was expected to free up some cash for expenditure, boosting business activity.
However, the onset of heavy rainfall has disrupted activity in key sectors, including education and trade.
The resultant wracking floods, whose intensity and destruction observers say was last witnessed two and a half decades ago in 1998/99 El Niño rainfall, are expected to slow down private sector activity.
“We share these concerns and worry that growth will slow in Q2:24 (second quarter of 2024) because of the widespread devastation and disruptions caused by the heavy rain,” Mr Legilisho said.
