Private sector activity declined last month

Business Daily Kenya:  Private sector activity in Kenya declined last month signalled by a fall in output as new orders remained the same, ...

Business Daily Kenya: 

Money. Photo/Courtesy

Private sector activity in Kenya declined last month signalled by a fall in output as new orders remained the same, the Purchasing Managers’ Index (PMI) Survey released by Stanbic Bank and HIS Markit indicates.

This is the third time the decline is being witnessed in the past four months and the fastest recorded since the inception of the series in January 2014. Weakness in demand led to reductions in purchasing activity and input stocks for the first time in the survey history. Firms continued to face higher input prices but continued to offer discounts amid intense competition.

Down from 49.9 in May to 47.3 in June, the seasonally adjusted PMI fell to a survey-record low. Overall, the second quarter was the worst-performing period in the series history.

Meanwhile, employment rose marginally, contributing to rise in backlogs despite flat new business. “Following the recovery in the Stanbic PMI in April, we had rightly urged caution due to the headwinds abound.

The private sector continues to slow down due to the political uncertainty ahead while reduced access to credit has also subdued domestic demand,” said Jibran Qureishi, Regional Economist East Africa at Stanbic Bank.

“Looking ahead, political uncertainty is likely to take centre stage and thus the private sector will probably not come out of the woods just yet,” he said. The report indicates that the new export order growth was marginal and the weakest in the current 11-month sequence of expansion.

The employment rose at the weakest pace in four months and one that was only marginal overall. Subsequently, outstanding business continued to rise, but at the slowest pace in 19 months. In response to lower output requirements, firms were discouraged from purchasing activities in June.

The post Private sector activity declined last month appeared first on Mediamax Network Limited.

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