Job Creation, expansion of firms boosts private sector growth in August

NAIROBI, Kenya, Sept 1 – Job creation and expansion of firms improved business activities in Kenya’s private sector with the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) rising to 51.1 points up from 50.6 reported in July.

The survey noted that the rise in sales led companies to expand output and that high activity and accumulation of workload encouraged companies to add to their workforces.

According to the Purchasing Managers’ Index, there was an increase in domestic demand in most sectors, and that rising orders from clients in the Middle East and Europe boosted overall export demand.

“Business conditions in the Kenyan private sector economy improved for a fourth straight month in August. Furthermore, the
rate of growth picked up as firms saw a faster expansion in new business compared to July. Job creation also strengthened,” the report noted.

Kuria Kamau, Fixed Income and Currency Strategist at Stanbic noted that “rising demand coupled with an increase in output should lead to a sustainable recovery in the 12-month outlook reported by businesses which remained close to its historical lows in August,” he said.

Nonetheless, the survey noted that business confidence fell to a near-record low with only one-in-five surveyed firms projecting output to grow over the next 12 months.

“The outlook for future activity slipped to almost the weakest in the series history over August and was only slightly above April’s record low. Reports of ongoing economic instability linked to the pandemic meant that only around one in five surveyed firms projected output to grow over the next 12 months,” it noted.

The survey, which relies on feedback from corporate managers in key economic sectors, noted that business conditions will improve unless the Government re-imposes stringent COVID-19 containment measures.

“Firms appear to be preparing to increase their output to meet this demand as evidenced by the higher employment levels and quantities of purchases reported in August,” it added.