Companies maintain their recovery momentum in a context of future pessimism (survey)

Conditions for Kenyan private sector companies improved for a fourth consecutive month in August, with recovery momentum remaining unchanged.

This is according to data from the Monthly Purchasing Managers Index (PMI) released by Stanbic Bank Kenya which was released on Friday.

The overall PMI strengthened to 51.1 points from 50.6 points in July to reflect improving trading conditions.

The companies involved in the PMI survey recorded a faster pace of expansion last month compared to July, bringing with it job creation which strengthened over the period.

The improvements were largely based on an acceleration in new orders alongside modest sales growth.

“An increase in domestic demand was observed in most key sectors except manufacturing, while increasing orders from customers in the Middle East and Europe boosted overall export demand. . However, companies have not been able to increase production to meet all the additional demand and, as a result, the number of arrears has increased, ”noted Kuria Kamau, fixed income and currency strategist of Stanbic Bank Kenya.

However, businesses were penalized by higher purchasing costs following the absorption of new taxes on products, including imported goods.

Despite the rebound in business conditions, the majority of companies are pessimistic about growth prospects over the next 12 months as they cite the continued economic instability linked to the COVID-19 pandemic.

The future production index failed to gain ground during the month and slipped to near a record low for the seven-year PMI series.

Kuria, however, expects the momentum of the recovery to continue in the near term.

“Growing demand coupled with increased production should lead to a lasting recovery in the 12-month outlook announced by companies which has remained close to their all-time lows in August,” added Kuria.

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