Private sector growth hits three-month high in Nov
High demand for goods and services boosted businesses last month. PHOTO | FILE
Kenya’s private sector recorded a faster growth in November as sharp rise in demand saw firms hiring more workers and increasing their production compared to the previous month, a market survey shows.
The CFC Stanbic Kenya Purchasing Managers’ Index (PMI) rose to 53.7 last month from 51.7 in October, marking a three-month high in improved business activity.
That suggests Kenya Revenue Authority is set for increased payroll and corporate taxes after missing collection target in first quarter of the fiscal year that started July by Sh28 billion, boxing the government into a tight fiscal corner.
“After a tough couple of months of growth, the private sector rebounded quite impressively in November, buoyed by a recovery mainly from output and employment,” Jibran Qureishi, regional economist for East Africa at CfC Stanbic said in a statement.
“The recent broad stability in the exchange rate has also helped ease off cost pressures for most firms.”
The PMI shows the direction of the economy by getting information from executives of private companies on employment, output levels and new orders booked. An index above 50 is indicative of economic growth.
The shilling has strengthened against the US dollar from lows of Sh106 in September to the current Sh102, reducing cost pressures on firms.
The weakening of the local currency was due to depressed flow of hard currency from horticulture and tourism battered by terrorist attacks that scared foreign visitors amid rising demand for dollars from importers.
The cash crunch in government also plunged the country in a tough macroeconomic environment after it issued a series of short term papers with yields of more than 20 per cent in October to plug budget shortfalls, crowding out borrowers from bank loans.
The State has since cut its appetite for domestic debt after it got Sh76 billion from foreign markets at the end of October, easing pressure on interest rates.
“The encouraging aspect of this month’s PMI report is the indication of growth being driven largely by domestic demand as suggested by the rise in new business orders despite new export orders stagnating,” said Mr Qureishi.
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