New export orders from Kenyan businesses rose the fastest in four months on higher foreign demand, shrugging off the slow start common with January.
The latest Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) covering January shows that increased demand saw businesses clear backlogs at the fastest rate in 14 months.
Firms were boosted by the influx of new business and stronger client bases, Stanbic Bank noted, adding that business activity has risen in each month since December 2017 as firms boosted their management teams.
“New export orders increased at the sharpest rate since October, with many businesses reporting higher foreign demand.
“Business activity at Kenyan companies continued to rise sharply, with the rate of output growth ticking up to a three-month high,” noted Stanbic Bank.
However, the month recorded a drop in the headline PMI to 53.2, from 53.6 in December, partly due to a softer increase in new orders in January.
The rate of growth eased to the least marked in four months, although it was still a solid improvement, according to Stanbic.
The PMI index is based on data compiled from purchasing executives drawn from diverse sectors such as agriculture, mining, manufacturing, construction, retail and services.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
The regional economist for East Africa at Stanbic Bank, Mr Jibran Qureishi, however, expects business activities to soften in the coming months.
“Owing to cyclical factors, private sector activity may soften somewhat over the next couple of months as growth broadly in the agriculture sub-sector eases,” said Mr Qureishi.
“However, despite these risks, lower international oil prices should help keep costs suppressed for the private sector and thus underpin purchasing activity.”
During the month, firms cut back on purchasing activity growth, with the rise in inputs purchases the weakest in 13 months.