Kenya's Private Sector Sees Slight Deterioration in Business Conditions in September, Stanbic Bank Report Shows
In September, Kenya's private sector experienced a slight decline in business conditions, with both output and new orders contracting once again. This reversal comes after a brief recovery in August, according to the latest report from Stanbic Bank. The Purchasing Managers' Index (PMI) dropped to 49.7 in September from 50.6 in August, falling below the 50.0 threshold that separates growth from contraction. This marks the third decline in the past four months.
Economist Christopher Legilisho from Stanbic Bank noted that the contraction in business conditions in September indicates that the pickup in August was likely a result of some recovery after disruptions caused by protests earlier in the year. Economic challenges faced by both businesses and households led to reduced sales and a fresh drop in activity. However, the slowdown helped reduce input price inflation, resulting in only a marginal rise in output prices.
While some sectors, such as manufacturing and construction, showed improvement with higher sales, others like agriculture, wholesale & retail, and services experienced declines. Employment levels remained stable, with little need reported for hiring new staff or replacing voluntary leavers due to slowing production capacity.
The survey also highlighted that business expectations for the coming year remained subdued, with only 4% of respondents expecting an upturn. Legilisho added that these expectations are at their weakest levels in a decade due to the economic headwinds faced this year.
Stable exchange rates and fuel prices over the past two months helped moderate cost pressures, with inflation expected to remain muted at around 4-4.5%. Overall, the survey reflects a mixed outlook for Kenya's private sector, with some sectors showing signs of improvement while others continue to face challenges.
Analysis:
In summary, the latest report from Stanbic Bank indicates that Kenya's private sector saw a slight decline in business conditions in September. This decline was attributed to economic challenges faced by businesses and households, leading to reduced sales and activity. While some sectors showed improvement, overall business expectations for the coming year remain subdued. The moderation in cost pressures due to stable exchange rates and fuel prices is expected to keep inflation low. This information is important for individuals and investors to understand the current state of Kenya's private sector and how it can impact their financial decisions moving forward.