Workers at an Export Processing Zone (EPZ) factory in Athi River. PHOTO | DENNIS ONSONGO
Activity in Kenya’s private sector slipped to its slowest pace in five months in November, hurt by a fresh round of restrictions to contain rising Covid-19 infections and deaths, a survey showed yesterday.
The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) for manufacturing and services dropped to 51.3 from a record 59.1 in October — breaking the streak of gains since August as the economy gradually re-opened after months of lockdown measures imposed in March to curb the spread of the coronavirus.
Any PMI reading above 50 indicates growth —which means the slip in performance in November signalled that private sector activity had been weighed down by the new restrictions imposed by President Uhuru Kenyatta early last month amid an upsurge of Covid-19 infections and deaths.
“Key to the slowdown were weaker increases in business activity and sales, as firms commented on issues with money circulation and economic stress caused by a rise in local Covid-19 cases,” analysts at Stanbic Bank and UK’s Markit wrote in the November PMI report.
“Reintroduced curfew measures meanwhile led to a drop in client demand at some businesses, while lockdowns in Europe curtailed growth in foreign new orders.”
They added that “lower capacity pressures led to a stalling of workforce expansion” which had only started in October after a job-shedding streak that started in February.
Ministry of Health data showed the virus infected a record 29, 821 persons in November, a 55.4 percent growth from October, killing 488 persons in what was the worst month since the pandemic struck mid-March.
The rising infections in November prompted Mr Kenyatta to extend daily curfew by an hour starting 10 pm from previous 11pm-4 am, and cut closing time for bars to 9pm from 10pm in revised restrictions, which last until January 3.
The maximum number of persons allowed at social gatherings such as weddings has also been halved to 50, with food only served to nuclear family.
The number of people allowed at burials has been retained at 100, with only 15 at the graveside under revised rules by the inter-faiths council.
A host of European countries also re-imposed travel and trade restrictions to stem the second-wave of coronavirus infections, hurting demand for Kenyan exports.
For instance, the UK, a key buyer of Kenya’s fresh produce such as cut flowers and tea, introduced a second round of shutdowns early November, largely affecting brick-and-mortar retail, travel, entertainment and leisure firms.
“Containment measures that were re-instilled last month were less stringent than before. However, the pace of the improvement in business activity slowed down partly due to a resurgence in Covid-19 cases,” Kuria Kamau, a fixed income and currency strategist at Stanbic Bank, wrote in the PMI report.
“Additionally, firms noted that the reintroduction of lockdowns in parts of Europe also hurt external demand for their goods.”
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