Stanbic Bank regional economist for East Africa, Jibran Qureishi. FILE PHOTO | NMG
The proportion of Kenyan private sector firms expecting to
increase production has dropped to 56 percent, the lowest in the last 10
months, showing growing pessimism for the future as a cash crunch
bites.
Markit Stanbic Bank Kenya Purchasing Managers’
Index (PMI) covering October shows 43 percent of the respondents predict
static business in the next 12 months.
The dimming
outlook is in sharp contrast from June when over 92 percent of companies
gave a positive prediction, citing plans to open new branches and
expand into other markets as well as benefit from government spending in
financial year 2019/2020.
“Output expectations
weakened to a 10-month low amid reduced optimism for the future…while
the general outlook for business activity at Kenyan companies remained
positive, the level of sentiment dropped to the weakest since December
2018,” said the report.
Companies that retained
optimistic forecasts related this to hopes of continued sales growth and
greater business investment. October headline PMI dropped to 53.2 from
54.1 posted in September with cash circulation issues continuing to
restrain business activity leading to backlog accumulation of orders for
the sixth successive month despite softening demand.
Stanbic Bank said business orders rose in October but at a slower rate of growth compared to September.
However,
backlogs were recorded as cash flow issues weakened firms’ ability to
meet demand, according to the regional economist for East Africa at
Stanbic Bank, Jibran Qureishi.
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