Ongoing heavy investment in infrastructure is expected to further boost business environment in Kenya. PHOTO | FILE
The private sector reported improved operating conditions in
February hitting a 22-month high, an indication of more jobs prospects
and economic activity.
The Stanbic Bank Kenya
#ticker:CFC Purchasing Managers’ Index (PMI) for February rose to 54.7
in February from 52.9 in January, marking the highest level since April
2016.
The PMI has now recorded above the neutral
50-mark threshold for three consecutive months, and the February’s
reading was stronger than the series average of 52.6.
A
reading above 50 signifies growth in overall business activity compared
to the previous month, while below that points to a reduction in
activity undertaken by firms.
“The Stanbic Bank PMI rose to its highest level in nearly two
years. We still expect strong performances mainly from the services and
agriculture sectors to support GDP growth this year, in addition to the
ongoing public investment in infrastructure,” said Stanbic Bank regional
economist for East Africa Jibran Qureishi.
“Of course,
a key boost to the economy could also transpire in the event there is a
revision to the interest rate capping law over the course of the year
which will subsequently begin to improve the flow of credit to the
private sector and assist in boosting productive capacity,” he said.
The
PMI survey findings showed that increase in business activity was
linked to stronger underlying demand conditions and greater inflows of
new work.
New business placed at the private sector
firms increased for the third consecutive month during February, and the
pace of growth accelerated the fastest since January 2017.
New
work increased in tandem with a high customer turnout and strong demand
from both domestic and external sources, as new export orders increased
at the fastest pace since November 2016.
In response to greater output requirements, the firms increased their staffing levels in February.
Although
the pace of job creation was the fastest in nine months, it remained
marginal overall. Robust demand conditions prompted firms to raise
purchasing activity during the month.
In line with the
trend for purchasing activity, pre-production inventories held by the
firms increased for the third consecutive month.
However,
the firms passed onto consumers the burden of higher input costs due to
higher transportation costs, currency volatility, raw material
shortages and inflation.
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