Business activity in the private sector remained strong in July boosted by the fastest growth in domestic and international demand in 11 months, a Purchasing Managers Index (PMI) showed on Monday.
The business activity, which however grew at a slower rate than in June, came as President Uhuru Kenyatta’s order for release of payments to State contractors continued to ease cash flow, offering financial relief for hundreds of cash-strapped firms.
Markit Stanbic Bank Kenya PMI, which is based on interviews with corporate managers largely in manufacturing and services sectors, showed the PMI readings fell slightly to 54.1 in July from 54.3 in June.
“There is clearly a positive shift in private sector sentiment that’s become evident over the past couple of months,” said Jibran Qureishi, regional economist in charge of East Africa at Stanbic Bank.
“We don’t think it’s a coincidence that the government has begun releasing some withheld payments during this period that is subsequently boosting business confidence and further emboldening firms to increase their purchasing activities.”
Readings of above 50 ordinarily signal an improvement in business conditions on the previous month, while those below 50 show deterioration.
“Output and employment rose further but at softer rates, while selling prices were driven up solidly. In addition, sentiment for future activity posted a new survey-record high,” said the survey.
“Hiring activity continued for the third month running, although the rate of job creation did ease from the two-and-a-half year high recorded in June,” said the survey.
