CfC confidence index hits 13-month high

Money Markets

Jibran Qureishi, an economist at CfC Stanbic Bank. PHOTO | SALATON NJAU |   NATION MEDIA GROUP

By JOHN GACHIRI, jgachiri@ke.nationmedia.com

In Summary

• CfC Stanbic Kenya Purchasing Managers’ Index (PMI), which measures purchases by 400 managers, has continued to rise for over a year indicating positive sentiment for the year ahead.
• The PMI for January stood at 56.4 points which is a 13-month high.
• A score above 50 indicates an improvement and a score below 50 shows low confidence.

Kenya’s private sector is optimistic 2016 will be better than last year on the back of increasing orders and stabilising costs, a monthly survey by CfC Stanbic Bank shows.

CfC Stanbic Kenya Purchasing Managers’ Index (PMI), which measures purchases by 400 managers, has continued to rise for over a year indicating positive sentiment for the year ahead.

The PMI for January stood at 56.4 points which is a 13-month high.

“2016 has begun on a solid footing, showing a similar trend to that seen towards the end of last year.

“The CfC Stanbic PMI accelerated to a 13-month high boosted by higher output, new orders and employment,” said CfC Stanbic East Africa regional economist Jibran Qureishi in a statement.

A score above 50 indicates an improvement and a score below 50 shows low confidence. The survey is carried out every month and is generated from responses from 400 senior purchase managers.

This is the third straight month that the index has been on a rise.

READ: Private sector growth hits three-month high in Nov

The survey also found that there has been a backlog of work which resulted in job creation as firms increased hiring to keep up with the orders.

“Panellists commented on new client wins generated in part by enhanced marketing strategies. Similarly, the rate of job creation at Kenyan private sector firms was the most marked since May last year,” said the survey.

“Survey participants indicated that hiring was generally a result of rising workloads, though this also placed pressure on operating capacity. Outstanding business was accumulated at the sharpest pace in the survey’s 25-month history.”

Orders, especially from export market, have resulted in the rise of new businesses. The latest survey also shows that consumers benefited from the stabilising of the shilling against major currencies which tamed costs amidst low oil prices.

“Notably, reports of currency weakness versus the US dollar were much less frequent than in previous months. Weaker cost pressures benefited consumers to some extent, as charges increased only modestly. Some respondents offered discounts in an effort to secure new business, while others continued to pass through higher input prices,” he said.

Stable shilling

CfC Stanbic survey’s findings mirror those of its rival Standard Chartered, which painted a picture of Kenyan companies being upbeat on the prospects of 2016 based on expectations that the cost of credit will come down.