In August, Kenya experienced an increase in business activity compared to the previous month of July. This improvement can be attributed to a reduction in political tensions that had arisen during nationwide anti-government protests a few months earlier.
According to the latest Purchasing Managers Index (PMI) survey by Stanbic Bank, the PMI index saw an increase from 45.5 to 50.6. This marked the first time in several months that the index exceeded the crucial 50-point threshold, indicating positive business conditions.
This positive shift follows a period of talks and negotiations between the government and the opposition, which led to increased political stability within the country.
The survey stated, “In August, the headline PMI reached 50.6, up from 45.5 in July, signifying an expansion in business conditions for the first time since January.” However, it also noted that this expansion was marginal, as it just surpassed the 50.0 mark. In July, the PMI had experienced its sharpest decline in almost a year.
Furthermore, the survey highlighted a partial recovery in output levels during August. Companies participating in the survey mentioned that the increased political stability had boosted demand and activity, especially in the services and manufacturing sectors, which had resumed growth.
Nevertheless, the PMI report indicated that this improvement was somewhat hindered by a rapid increase in inflation. It noted, “Survey data from August showed that inflationary pressures remained historically high, affecting business expenses.” Almost 38% of the surveyed firms reported a monthly increase in their input costs, reflecting one of the sharpest cost increases observed.