September registers highest employment rate as PMI falls to 5-month low

NAIROBI, Kenya, October 5 – September registered the highest employment rate since January, the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) survey has revealed noting that agriculture and construction sectors saw the highest rate.

Despite improvements in the levels of employment and purchases, the survey noted that the future outlook for output continues to be relatively low on account of uncertainty around inflation and COVID-19.

Overall, the month witnessed slower business activity compared to August with the PMI index falling to a five-month low of 50.4 points from 51.1.

July’s PMI stood at 50.6.

The survey attributed the decline to rising living costs weighed on consumer spending and new orders.

“There were numerous reports that a rise in living costs had weakened consumer spending, leading to a softer – and only marginal – rate of total sales growth. Subsequently, the rate at which business activity expanded was the slowest seen since the return to growth following April’s lockdown-induced decline,” it said.

It specifically noted that the hike in prices of petrol, diesel, and kerosene particularly drove a sharper rate of both input cost and output charge inflation

“Businesses found that the price hike added to purchasing prices, which rose sharply. Faced with higher cost burdens, firms raised their selling charges to the greatest extent since February,” it said.

“While export demand expanded by the fastest rate in 13 months, the improvement in domestic demand was negatively affected by a rise in output prices. Firms hiked output prices to protect their profit margins following a rise in fuel prices during the month,” Stanbic Bank’s Fixed Income and Currency Strategist Kuria Kamau said.