Markit Stanbic PMI reading at 53.7 in December 2021

Private sector activity expanded to a 14-month high last month on account of easing of Covid-19 restrictions both in Kenya and other countries. 

The Markit Stanbic Bank Kenya Purchasing Managers’ Index rose for the third straight month to a reading of 53.7 in December from 53.0 in November. 

The 12-month outlook however fell to a record low with most firms expecting business conditions to remain largely the same this year.

A solid improvement in the health of the private sector economy drove the high expansion in the private sector activity.

Driving the upturn was a further strong increase in new work intakes at Kenyan firms who added to their workforces for an eighth consecutive month in December.

Output levels rose sharply and at the fastest rate since the beginning of 2021. 

To manage higher workloads, companies increased the number of workers. Although the rate of job creation eased slightly from November’s two-year high, this allowed firms to lower their backlogs of work for a second month in a row. 

The pace of growth was the strongest seen since October 2020 with private sector players noting improved customer demand and better cash flow as economic conditions recovered further from Covid-19 restrictions. 

Business confidence for 2022 dropped in December as the Markit Stanbic Bank Kenya Purchasing Managers’ Index shows the level of sentiment was the weakest seen since the survey began in January 2014, with just 19% of respondents giving a positive outlook. 

While there were hopes of expanding and offering new products and services in 2022, optimism fell as COVID-19 cases rose to record levels last month. 

The December data also indicated a sharp increase in input costs as raw materials were costlier due to ongoing supply issues and stronger demand. 

Efforts to build inventories in the face of strong new order inflows saw purchasing activity increase at the joint-fastest pace seen in 2021.