Businesses across the private sector in the country have been on recovery last month, a survey by Stanbic Bank Purchasing Manager’s Index (PMI) has shown.
The report signaled an improvement in business performance for the first time in five months, driven by solid expansions in output, new orders and employment.
The Kenya PMI rose to 51.9, up from 49.4 in August and above the 50.0 neutral mark for the first time since April.
The index pointed to a fresh upturn in the health of the private sector, after a period impacted by political protests and rising price pressures.
Driving the improvement in business conditions was a renewed expansion in activity, which in turn was strongly related to rising sales and a stabilizing economy.
Out of the firms surveyed, roughly a third (33 per cent) noted that their output had grown during
September, compared to 23 per cent that recorded a decline.
Some businesses reportedly benefitted from effective marketing and investment into products and services.
This is even as some areas experienced weakness, especially in the construction industry where output fell sharply.
On sales intakes, the survey data also signaled a renewed upturn in September.
“Encouragingly, business prospects for the upcoming year were still strong, albeit far off from historical trends this implies that, while conditions for some firms have been improving, most still experience the business environment as challenging,” Christopher Legilisho, Economist at Standard Bank commented.
New business growth was solid, having rebounded after four months of consecutive downturns.
The recovery encouraged firms to hire new staff, leading to a rise in employment that was the quickest recorded since May 2023.
With staff capacity up, firms managed to deplete their backlogs for the fourth month running.
In contrast, purchasing activity continued to fall in the reported period with businesses citing that low sales in recent months had weighed on their ability to buy new inputs.
Nevertheless, with supply-side pressures easing further after protest-related disruption and vendors willing to deliver items more quickly to gain work, input stocks did increase.
Notably, delivery times improved at the strongest rate in exactly four years.
For the second month running, Kenyan businesses reported a softening of input price inflation.
Though solid, the latest increase in overall costs was the weakest since May.
Where a rise was recorded, firms signaled this was mainly due to higher taxes and rising prices for several items such as fuel and foodstuff.
As cost pressures eased, firms raised their selling prices to a greater extent than the 12-month low seen in August.
Inflation was largely linked to higher costs and rising sales. However, the increase was only modest.
Several firms hope to expand their outlets, diversify product offerings and ramp up marketing.
