Economy

Private sector growth hits 29-month high on rising demand

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The Purchasing Managers' Index (PMI) findings show that sales climbed at the fastest pace since January 2016. FILE PHOTO | NMG

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Summary

  • The Markit Stanbic Bank Kenya’s Purchasing Managers' Index (PMI) — a monthly measure of private sector activity — increased to 56.3 in September from to 53 a month earlier, the highest level since April 2018.
  • The PMI findings, based on feedback from corporate managers in key economic sectors such as manufacturing and agriculture, show that sales climbed at the fastest pace since January 2016.

Kenya’s private sector activity jumped to a 29-month high in September lifted by rising local and foreign consumer demand following the gradual re-opening of the economy in the wake of the Covid-19 pandemic.

The Markit Stanbic Bank Kenya’s Purchasing Managers' Index (PMI) — a monthly measure of private sector activity — increased to 56.3 in September from to 53 a month earlier, the highest level since April 2018.

"The PMI indicated further improvement in business confidence and operating conditions this (September) month, thanks in large part to the lifting of some domestic Covid-19 containment measures,” Stanbic Bank head of Africa research Jibran Qureishi said in the PMI report.

“This should gradually continue to support activity into the end of the year. That said, we ought to be cautious around the possibility of a second wave globally that could dampen external demand again.”

President Uhuru Kenyatta on August 27 raised the maximum number allowed in mass gatherings to 100 from 15, boosting consumption at ceremonies such as weddings which had been curtailed at the height of the pandemic.

This came on the back of the resumption of international flights from August 1, which increased cargo capacity for Kenya’s fresh produce exports especially to Europe and the Middle East.

The restart of domestic flights and easing of inter-county movement in July had, on the other hand, lifted domestic demand.

The PMI findings, based on feedback from corporate managers in key economic sectors such as manufacturing and agriculture, found that sales climbed at the fastest pace since January 2016.

“With the government easing lockdown restrictions during the third quarter of the year, firms saw a release of pent-up demand as clients largely returned to markets,” noted the report by Stanbic Bank and UK’s Markit.

“New orders grew for the third month running, helped by a further increase in foreign orders, particularly from Europe and the Middle East.”