Positive investor sentiment marked with increased demand for goods both in the local and foreign markets saw Kenya last year post strongest private sector growth since 2014.
The monthly Stanbic Kenya Bank Purchasing Managers’ Index shows operations by private firms improved marginally to 53.6 last month from 53.1 in November.
“The Stanbic PMI closed the year strongly, recording the highest average since 2014. We believe that Kenya’s GDP growth remains on track to test six per cent in 2018 and furthermore the good weather conditions in Q42018 will have underpinned the agrarian sector as well,’’ Jibran Qureishi, regional economist E.A at Stanbic Bank said.
Kenya’s December reading was second best among leading economic power houses in Africa. Nigeria had the best at 61.10 while South Africa and Egypt recorded a below average of 49.50 and 49.20 respectively.
The sector defied political fiasco in the country to post above average performance since January, with September’s 52.7 being least for the year.
Readings above 50 points signal an improvement in business conditions on the previous month, while readings below that show deterioration.
In April, the sector which was witnessing lowest lending of less than 2.4 percent went on to post a 26 month high since January 2016 of 55.7 in April, thanks to political calmness that followed famous hand shake between President Uhuru Kenyatta and opposition chief Raila Odinga.
The PMI is a composite index based on five of the individual indexes which new orders, employment suppliers’ delivery times, Stock of Items Purchased with the Delivery Times index inverted so that it moves in a comparable direction.
New orders for the month under review continued to rise sharply, with the pace of increase slightly faster than in November.
Similarly, export orders expanded at a substantial rate, indicating that firms were buoyed by an influx of both domestic and overseas demand.
Output and new orders recorded further sharp increases, with the latter growing at a faster rate than in November.
Employment growth also improved, while input buying expanded sharply. The growth was driven by an increase in casual workers in line with the rise in new orders.
At the same time, cost inflation weakened to the least marked in five months, with output charges also seeing a softer increase
Backlogs decline for first time since July with firms scrambling to clear backlogs of stock for the year which subsequently boosted output. Surprisingly costs remained steady for firms during the festive season.