Kenyan records improved business conditions in November

Kenyan firms saw a greater improvement in business conditions midway through the final quarter of 2024; this is according to the Stanbic Bank Purchasing Managers’ Index (PMI) report for November.

The report indicates that sales grew at the fastest pace since May, leading to a moderate increase in output and stronger purchasing activity.

The PMI indicates a sustained expansion in the Kenyan private sector in November, posting 50.9, up from 50.4 in October. The rate of growth was the highest in six months but only marginal.

Christopher Legilisho, an Economist at Standard Bank, said that the Stanbic Bank Kenya PMI data for November reveals a private sector growing in optimism about current economic conditions.

The PMI rose to 50.9, indicating an expansion in business conditions for a second consecutive month due to improved output and new orders amidst stable employment.

“New orders grew at the fastest pace in six months, with improvements in consumer spending and increased travel contributing to higher sales. However, this was not broad-based but only in the wholesale, retail, and services sectors. Sales declined across agriculture, manufacturing, and construction,” said Legilisho.

“Employment levels remained in expansion for a second consecutive month, although job growth was slower than in October. Hiring was associated with increased workloads, more generous marketing budgets, and improved orders,” he added.

Legilisho said that firms noted that higher sales supported increased purchasing activity, which grew at the fastest pace in over two years, and inventories were boosted to cater for strong demand.

“With positive economic momentum, input and output cost pressures increased due to higher taxes and increased outlays by firms to support higher sales volumes. Despite the notable improvement in current conditions in November, firms remain gloomy about the outlook,” he said.

Legilisho said that business expectations remained relatively weak and softened slightly since the start of the fourth quarter. Just 8 per cent of firms expect activity to rise over the next 12 months, with comments relating positivity to new marketing, digital technologies, and branch openings.

The report further indicates that accelerated growth momentum contributed to higher price pressures, as input costs rose solidly from October. Consequently, selling prices increased to the greatest extent for nine months.

“Companies in the survey panel often highlighted an improvement in customer spending and increased travel driving sales higher. The upturn was concentrated in the services and wholesale and retail segments; however, agriculture, manufacturing, and construction recorded declines in new orders,” read the report in part.

Nevertheless, the overall rise in sales, which was the best for six months, led to an expansion in private sector activity in November. The rate of output growth picked up from October and climbed above the series average. Higher output requirements supported a solid uplift in purchasing activity that was the fastest observed since September 2022.

This story originally appeared on Kenya News Agency.