The Kenyan economy has registered mixed results with some sectors registering slow growth rates while others improved despite the softening economic environment in the country.
In a Stanbic Bank purchasing manager index report for November, new business placed at Kenyan firms rose sharply in November, mainly due to greater advertising and a higher number of referrals.
However, the rate of growth was also the slowest for six months and broadly in line with the series trend. Furthermore, purchase price inflation accelerated only slightly in November, following October’s 40-month low.
Kenyan businesses stock levels have marked the slowest rate in nine months with the rate of demand growth at the softest since May.
According to Stannic Bank’s purchasing manager’s index, output prices fell marginally, while cost inflationary pressures weakened to a 27-month low. Conversely, new orders received by Kenyan firms grew at the slowest pace in six months.
Kenyan businesses, however, registered a solid improvement in the health of the private sector in November. A steep increase in new work allowed firms to raise output at a faster pace.
The report also indicates that output levels improved at the quickest rate in four months, following only a slight increase in October. While cash flow issues have hindered business activity recently, fewer firms commented on this as reducing output in November.
At the same time, increasing sales and good weather conditions helped to strengthen the uplift.
The increase was still sharp overall; with many companies finding that marketing and word-of-mouth continued to bring additional clients. Firms also highlighted a steep increase in new export orders, the fastest in 20 months, due to greater demand from European customers.
A rise in output requirements encouraged firms to increase workforce numbers for the seventh consecutive month in November.
The rate of expansion was solid and broadly similar to October. In addition, input holdings were increased through a sharp rise in purchasing activity. Nevertheless, the overall expansion in stocks was the weakest since February.
Despite higher demand, firms sought to lower selling prices for the second month in a row during November. That said, in line with October, the rate at which charges fell was marginal. According to panelists, the reduction was large to attract new customers and increase market share.
Input costs rose at the softest pace since august 2017, as companies reported only a modest increase in purchase prices and a slight uptick in staffing costs.
Higher purchase costs were mainly attributed to higher import costs and taxes. Lastly, the outlook for activity in 12 months’ time weakened markedly during November, as fewer panelists gave a positive forecast compared to those who predicted no change.