Private sector growth hits 10-month high

In Summary

The employment index accelerated to hit 53 points, highest level seen since December 2016.

Jibran Qureishi
Jibran Qureishi
Image: FILE

Increased demand for goods in the domestic and foreign markets drove up Kenya’s private sector growth to a 10-month high of 54.3 in June compared to 51.3 in May.

The monthly Purchasing Managers Index (PMI) by Stanbic Bank further attributed the growth to an easing of cash flow over the past few months, with the private sector lending rising to 3.2 per cent.

Almost all indices including new orders, export orders,stock, quantity of purchase used to measure the overall performance of the sector hit a six month high, with the employment index touching 53 per cent highest level seen since December 2016.


Stanbic's regional economist for East Africa Jibran Qureishi said the recovery reflects the upbeat sentiment from private sector firms mainly due to the government releasing payments owed to both contractors and suppliers as well as VAT refunds.

‘’The pledge by the President Uhuru Kenyatta at the Madaraka celebrations to ensure that containers are cleared quicker at the port while the commitment to clear private sector arrears in the FY2019/20 outlined in the budget speech, should underpin economic activity if implemented in the second half of 2019,’’ Qureishi said.

The index shows firms posted a sharp increase in new orders during the month, with a number of those surveyed noting a widening of their client base.

Sales grew at the fastest rate in the year, fueling expansion in output levels during the month under review, 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,’’ PMI statement said.

Business confidence for future output strengthened considerably, with latest data signaling 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. Many panellists also reportedly intend to open new branches in the near future.


Meanwhile, increased output growth during June led Kenyan companies to raise input purchases, forcing consumers to buy at slightly higher rates compared to May.

‘’Firms highlighted a number of inflationary effects, such as higher taxes, fuel hikes and increased input demand. Wages also grew, but at only a moderate rate, forcing overall input costs to rise steeply, hence forcing companies to raise prices,’’ Stanbic Bank said.