Purchasing activity remains solid in Kenya and costs remained relatively muted despite the Michuki transport rules which had raised costs earlier in the month as electricity and food prices declined.
Operating conditions in Kenya’s private sector economy improved solidly in November 2018, although the rates of growth in output and new orders were marginally below those seen in October according to Stanbic Purchasing Manager’s Index (PMI) ™ .
Data collected by Stanbic Bank among private sector players in the country showed that despite disruptions caused by transport skirmishes and high cost of energy, the economy was resilient posting a higher ranking than that of October.
The expansion of export demand also fell to its weakest in ten months. Firms lowered the pace of job creation, but at the same time raised purchasing activity at the sharpest pace since June. Output price inflation up-ticked marginally, while cost inflation declined to its softest in four months.
Commenting on November’s survey findings, Jibran Qureishi, Regional Economist E.A at Stanbic Bank said, “Despite the Stanbic PMI dipping slightly in November, purchasing activity remains solid. In fact, costs remained relatively muted despite the Michuki transport rules which had raised costs earlier in the month as electricity and food prices declined.”
Qureshi said the aforementioned factors, in addition to lower international oil prices, should continue to keep costs suppressed for the private sector over the coming month and thus underpin purchasing activity.
Employment rose at a more gradual pace in November, following a solid rate of job creation in October. Similarly, the rate of accumulation in backlogs of work eased to a three-month low, indicating that weaker demand growth had reduced the pressure on unfinished orders.
Vendor performance improved substantially in November, as the pace at which delivery times shortened was the strongest since August. Panellists continued to associate this with high competition among suppliers.
Meanwhile, input price inflation cooled to a four-month low, after a relatively marked increase in the past few months. Staff costs increased marginally, while purchase prices still rose sharply. Firms that saw prices inflate pointed to the rise in fuel and material costs.
Output prices grew substantially, partly due to the recent roll-out of the Michuki transport laws. Several panellists in the transport sector raised charges because of the enforcement of new penalty fares.
The Purchasing Managers’ Index™ is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Kenyan economy, including agriculture, mining, manufacturing,construction, retail and services.
The panel is stratified by Standard Industrial Classification (SIC) group, based on industry contribution to GDP. Survey responses reflect the change, if any, in the current month compared to the previous month based on data collected mid-month.
For each of the indicators the ‘Report’ shows the percentage reporting each response, the net difference between the number of higher/better responses and lower/worse responses, and the ‘diffusion’ index.