Businesses Pick up after Election Activities are Over

Kenya’s private sector activity increased in September for the first time in six months. This was because the election season was over, and businesses were able to get back to work.

The overall figure derived from the Stanbic Purchasing Managers’ IndexTM (PMI) survey improved to 51.7 in September from 44.2 in August, indicating increased activity.

Readings above 50.0 indicate business conditions have improved over the previous month, while readings below 50.0 indicate a decline. Since March, the figure has remained below the 50.0 no-change mark, indicating that business activity has remained subdued.

According to the survey, firms bought more inputs because supply chains improved during the month.

Still, employment was mainly stable, even though people worried about the cost-of-living crisis.

Cost pressures were made worse by higher fuel prices in September, which caused firms’ selling prices to rise more quickly.

According to the survey, production levels have started to grow again for the first time since February, and they are doing so at a solid rate.

Agriculture, wholesale, retail, and services all grew, while manufacturing and construction both went down.

Businesses bought a lot more in September because new orders went up. This was in line with the shorter lead times for supplies because of the election the month before.

So, the number of purchases rose at the fastest rate since April.

Even though the outlook for future activity improved in September, worries about the cost-of-living crisis kept the outlook low.

Only 12% of the panelists thought that output would grow over the next 12 months, which was one of the worst predictions in history. Because of this, it was hard to do new jobs, and the number of jobs only increased by a small amount.

Madula pointed out that recovering demand, combined with the phase-out of fuel subsidies, will almost certainly exert inflationary pressure.

“A second round of inflationary pressure could persist into 2023 due to higher electricity prices, domestic fuel pump prices, and the excise duty hike from October. This could restrain consumer spending in the near term,” he said.