COVID-19 resurgence dampens private sector growth outlook
Business growth expectations over the next 12 months now stand at their lowest ever thanks to a recent surge in infections.
While October held a promise for a rapid recovery, growth for Kenya’s private enterprise has been washed up.
According to the just-published Stanbic Bank Kenya Purchasing Managers Index (PMI), output in local enterprises slumped to a five months low.
The PMI index subsequently slumped substantively to 51.3 points from an all-time high of 59.1 points at the end of October.
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This is as firms report softer activity and a slack in new orders. Key among issues reported by enterprises include money circulation constrains and a renewed economic stress caused by a rise in local COVID-19 cases.
Reintroduced curfew measures have meanwhile led to a drop in client demand at some businesses while lockdowns in Europe have curtailed growth in new foreign orders.
Subsequently, firms have slammed brakes on new staff hires ending a short lived recruitment window that begun in October following an eight month rot that saw enterprises cut jobs.
Additionally, local enterprises have marked a rise in overall costs of doing business as purchase/input prices remained on an expansionary curve.
Nevertheless, firms have kept output prices low to include discounts as part of efforts to improve sales in a dampened economic environment.
Only one in every four companies included in the PMI survey predicted a rise to activity in the year ahead.
“Containment measures re-instilled last month were less stringent than before. However, the pace of the improvement in business activity slowed down partly due to a resurgence in COVID-19 cases. Additionally, firms noted that the reintroduction of lockdowns in parts of Europe also hurt external demand for their goods,” Stanbic Bank Fixed Income and Currency Strategist Kuria Kamau commented.
