There was a marked improvement in the health of Kenya’s private sector, in the month of June as businesses drove up activity in line with an accelerated rate of growth in new business, the latest Markit Stanbic Bank Kenya Purchasing Managers Index (PMI) survey revealed on Thursday.
According to the survey seen by APA on Thursday, firms also recorded a sharp increase in workforce numbers, while expectations for output over the coming year improved to the highest in the survey history.
The headline figure derived from the survey is the PMI. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
The index posted at 54.3 in June, climbing up 3 index points from 51.3 in May to the highest reading in ten months.
Overall, this signalled a steep improvement in operating conditions at Kenyan private sector businesses.
Positive movements were recorded in all five sub-indices contributing to the headline figure.
Firms enjoyed a sharp increase in new orders during the month.
The rise was reportedly driven by demand from both domestic and external markets, due to the widening of the their client base.
“Some also mentioned an easing of cash flow issues over the past few months. Overall, sales grew at the fastest rate in the year so far. As such, there was a strong expansion in output levels in June, with the rate of growth increasing markedly from May to a five-month high. This fed through into a solid increase in staff numbers that was the quickest seen in two-and-a-half years,” noted the survey released in Nairobi.
Furthermore, the survey noted, business confidence for future output strengthened considerably in June, with latest data signalling the highest level of optimism in the survey’s history.
Alongside the sharp increase in new orders, firms stated that new government spending plans should help business growth over the year.
Meanwhile, increased output growth during June led Kenyan companies to raise input purchases.
The rate of expansion was the quickest recorded since last November, leading to a sharp rise in stock levels.
Demand for inputs also placed extra pressure on suppliers.
While delivery times shortened overall, they did so at the softest pace in over one-and-a-half years.
At the same time, purchasing costs rose at the sharpest rate in eight months, noted the survey.
The PMI is based on data compiled from a survey sampling approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Kenyan economy, including agriculture, mining, manufacturing, services, construction and retail.
JK/as/APA