Private sector activities last month recovered from a four-month drop in October, a monthly survey showed yesterday, citing increased demand.
The Purchasing Managers' Index survey by mid-tier lender Stanbic Bank and research firm IHS Markit indicated that business conditions rose to 53.3 from a four-month low of 52.0 in October.
The performance was broadly in line with an average of 53.4 seen in the third quarter, although it remained below the overall series average of 54.6.
The report shows that private companies in November posted the fastest growth in new jobs since February. This was supported by a rise in input stocks due to a steady increase in demand.
Stronger order books also led to substantial pressure on operating capacity, the report added, leading to recruitment of additional staff.
“Faced with mounting capacity pressures, a number of firms chose to hire additional staff. The rate of job creation was solid overall,” Stanbic Bank regional economist Jibran Qureishi said in a statement.
The rate of pre-production inventory building quickened as a result of increased outputs, with the respective index climbing to its highest since data collection began in January 2014.
"Demand from neighbouring Uganda which is a key trading partner for Kenya was indeed a key reason behind this recovery,” Qureishi said.
Output growth also picked up, although at a lower rate than that for new work. The pace of expansion remained subdued relative to the series average.
“Looking ahead, cost for firms could start edging higher owing to the weaker exchange rate. However, more specifically, we remain concerned around the sharp slowdown in private sector credit growth which could eventually prove to be a stumbling block for activity within Kenya’s private sector,” he said. “Furthermore, erratic rainfall in quarter 4 of 2016 also poses as a risk to agriculture production.”
Backlogs rose at a survey-record pace, surpassing the previous high recorded in September.
The rate of salary growth reached a nine-month high, linked to the employment of skilled workers and commission-based payments.