An export processing zone /HANDOUT
Kenyan firms saw
a greater improvement in business
conditions midway through the final
quarter of 2024 with sales growing
at the fastest pace since May, leading
to a moderate increase in output and
stronger purchasing activity.
Accelerated growth momentum contributed to higher price pressures, as input costs rose solidly from October. Consequently, selling prices increased to the greatest extent for nine months.
While firms recorded higher sales, prices for commodities increased, pushing up the cost of living for consumers whose purchasing power increased.
The government has been implementing several policies to ensure ordinary citizens have money in their pockets.
For instance, the Central Bank of Kenya has lowered the base-lending rate to 12 per cent, with a further cut expected Thursday.
The headline figure derived from the survey is the Purchasing Managers’ Index (PMI) rising to 50.9 from 50.4 in October.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
The rate of growth was the highest in six months, but only marginal. Supporting business conditions was a moderate increase in new order volumes.
Companies in the survey panel often highlighted an improvement in customer spend and increased travel driving sales higher.
The upturn was concentrated in the services and wholesale and retail segments however, whereas agriculture, manufacturing and construction recorded declines in new orders.
“Nevertheless, the overall rise in sales, which was the best for six months, led to an expansion in private sector activity in November. The rate of output growth picked up from October and climbed above the series average,’’ the survey reads.
Higher output requirements supported a solid uplift in purchasing activity that was the fastest observed since September 2022.
Supplier delivery times continued to shorten in November, although the pace of improvement remained marginal.
Firms often noted that strong competition among vendors and better material supply aided deliveries. This in turn supported uplift in stocks, albeit the softest recorded since August.
Despite sales growth rising, job creation across the Kenyan economy was tempered in November. Whilst some businesses took on more staff amidst higher workloads and greater marketing budgets, most panelists kept their workforces stable.
Outstanding work volumes ticked up after a fresh decline in October.
“Employment levels remained in expansion for a second consecutive month, although jobs growth was slower than in October. Hiring was associated with increased workloads, more generous marketing budgets, and improved orders. Firms noted that higher sales supported increased purchasing activity, which grew at the fastest pace in over two years, and inventories were boosted to cater for strong demand.”
On prices, the latest survey data
pointed to an acceleration of input cost
inflation in the private sector.
