February private sector activity rises highest in over a year
Kenya’s private sector experienced a significant uptick in growth in February, buoyed by several key factors that propelled business activity to its highest level in just over a year.
According to the Stanbic Bank Kenya Purchasing Managers’ Index (PMI), which registered at 51.3, this growth trend marks a notable turnaround from previous months, signaling a positive shift in the country’s economic health.
One of the primary drivers of this growth was the easing of inflationary pressures, which contributed to a surge in new orders across various sectors.
Lower fuel prices played a crucial role in this regard, helping to cool input cost inflation to a 26-month low. This, in turn, supported a mild increase in output prices, providing a further boost to overall business activity.
Christopher Legilisho, an Economist at Standard Bank, highlighted the broad-based nature of this expansion, noting that output increased across key sectors such as agriculture, manufacturing, and services.
The output sub-index, in particular, rose to its highest level in 13 months, indicating a moderate expansion in private sector activity.
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Fastest growth in sales
New orders also registered an uptick, with companies reporting the fastest growth in sales since January 2023, driven by improving customer demand, new product releases, and improved stock levels.
Despite these positive developments, not all sectors experienced growth. Construction and wholesale and retail activity saw a slight decline, highlighting the nuanced nature of the economic recovery.
However, overall staffing levels at Kenyan companies grew for the second consecutive month, reversing four months of decline at the end of 2023.
Casual laborers were mainly hired to fulfill order books, signaling a cautious approach to expanding permanent employment in industries.
Looking ahead, while there is optimism about the current growth trajectory, there is also a sense of uncertainty regarding future activity.
Confidence regarding future activity fell to a survey low, with only 6 percent of respondents comprising purchasing managers in a panel of around 400 private sector companies, expecting output growth.
This suggests that while the current economic environment is conducive to growth, there are lingering concerns about the sustainability of this growth trajectory.
