Economy

Private sector jobs growth hits 2-year high in November

jobs

Graduates queue for job interviews. FILE PHOTO | NMG

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Summary

  • A monthly survey, based on feedback from about 400 corporate managers, suggested that companies in agriculture, wholesale and retail, services and mining sectors reported “solid expansion” in the workforce last month.
  • In late October, President Uhuru Kenyatta lifted a night-time curfew that had been in place since March 2020, a move that was expected to spur economic activity.
  • The sustained hiring is a boost to jobseekers, especially the more than one million young people who graduate from colleges and secondary schools in search of low-cadre positions like clerks.

Kenya’s private sector hiring increased in November, growing fastest in two years, pointing to increased workload after lifting the 18-month night-time curfew imposed to contain the spread of Covid-19.

A monthly survey, based on feedback from about 400 corporate managers, suggested that companies in agriculture, wholesale and retail, services and mining sectors reported “solid expansion” in the workforce last month.

In late October, President Uhuru Kenyatta lifted a night-time curfew that had been in place since March 2020, a move that was expected to spur economic activity.

The manufacturing sector, which is battling increased cost of raw materials, was the only sector that did report a significant expansion in job opportunities, according to findings of Stanbic Bank Kenya’s Purchasing Managers Index (PMI).

“The rate of workforce expansion was the quickest seen in exactly two years, which respondents often attributed to higher workloads,” analysts at Stanbic Bank and UK researcher, IHS Markit, wrote in the PMI report for November.

The overall PMI reading for November — a measure for month-on-month private sector activity — rose to 53 from 51.4.

This was the highest monthly growth in business deals in 10 months, signalling an upturn in demand for goods and services which prompted a bump in output and jobs growth.

The sustained hiring is a boost to jobseekers, especially the more than one million young people who graduate from colleges and secondary schools in search of low-cadre positions like clerks.

Nearly 730,000 jobs were lost last year when Kenya imposed coronavirus-induced lockdowns that led to layoffs, pay cuts and unpaid leave.

New orders rose fastest since May when public health authorities eased trade shutdowns and travel restrictions after the third-wave of infections. The same growth rates were mirrored in production levels, the PMI suggests.

“Domestic demand increased rapidly in response to the lifting of the curfew, with the main beneficiaries
being firms in services, trade and construction. Firms, in turn, increased their output significantly to meet the rising demand ahead of the festive period, resulting in the first reduction in work backlogs in the past five months,” Mr Kuria Kamau, a fixed income and currency strategist at Stanbic Bank, wrote in the PMI report.

"To achieve the higher output, firms ramped up their purchases and staff levels at record rates.”

Firms, however, raised salaries at the slowest pace since May when they started offering a higher pay largely to compensate for rising cost of living and motivate workers after re-opening.

The report links fractional rise in wages for November to largely muted industrial actions and easing cost of living as measured by inflation which slowed to a seven-month of 5.80 percent.

President Uhuru Kenyatta on October 20 stopped the nationwide nighttime curfew that had been in place since late March 2020 to stem the spread of the coronavirus, boosting economic recovery especially for hardest-hit sectors such as hospitality, retail as well as transport and logistics.

The decision was informed by falling Covid-19 infection rates which had consistently hit below World Health Organisation-recommended five percent of daily tests in prior months. The positivity rate is now touching below a percentage of the daily samples.

However, economic recovery has been overshadowed by higher taxation measures, global oil prices and persistent disruptions in global supply chains which pushed cost pressures to a 16-month high during the peak in July.

Input costs for Kenyan firms last month rose at highest pace since July on the back of weak supply of materials as a result of constraints at major ports in China and the US, rising cost of energy and higher value added tax (VAT), according to the PMI report.

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