Business confidence hits 7-year low in December on Covid-19 surge

NAIROBI, Kenya Jan 5-Kenyan firms reported record low business confidence for 2022 as Covid-19 continued to ravage economic recovery, the latest Stanbic Bank’s monthly Purchasing Managers’ Index(PMI) indicates.

The PMI survey noted that 19 per cent of the 400 respondents across private sector companies gave a positive outlook.

It attributed the poor outlook , the weakest seen since the survey began in January 2014 to the surge of Covid-19 cases in the country with December having reported record positivity rate of upto 30 percent.

“While there were hopes of expanding premises and offering new products and services in 2022, optimism fell as Covid-19 cases in the country rose to a record level,” the survey noted.

Despite the low confidence, Kenyan firms saw a further strengthening of business growth  with the PMI rising for the third straight month to 53.7 in December from 53.0 in November.

The reading was the highest recorded in 14 months and pointed to a solid improvement in the health of the private sector economy.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

“Economic activity ended the year on a relatively high note as evidenced by the PMI reading that was at a 14-month high. Despite this, the 12-month outlook as reported by firms fell to the lowest level on record with most firms expecting business conditions to remain largely the same in 2022.” said Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank.

The pace of growth was the strongest seen since October 2020, as panelists commented on improving customer demand and better cash flow as economic conditions recovered further from pandemic measures.

To manage higher workloads, companies also raised their staff levels, though the pace of job creation was only modest and softer than November’s two-year high.

“Kenyan firms added to their workforces for an eighth consecutive month in December. The rate of job creation eased slightly from November’s two-year high, and was broadly in line with the series average,” the survey noted.