Kenya's private sector ends 3 months of contractions
Operating conditions remained stable throughout the month.
Written by Ziad Abdel Fattah:
Private sector activity has rebounded in Kenya During June, ending a series of three previous monthly contractions.
The Purchasing Managers’ Index (PMI) issued by Stanbic Bank Kenya rose to 50.0 points in June, compared to 46.6 points in the previous month.
Readings above 50 points indicate growth in business activity, while readings below that indicate contraction.
Stability of operating conditions
The latest Purchasing Managers' Index (PMI) reading indicated that operating conditions stabilized in June, following contractions in each of the previous three months.
The survey showed that improved demand led to an increase in new orders, which supported sales across the private sector, although businesses continued to face challenges from weak consumer spending and high operating costs.
Weak production growth
Despite the recovery, output growth remained weak as firms cited weak customer demand and continued price pressures.
Standard Bank economist Christopher Leglishow said companies remain optimistic about the outlook.
Legilecho said in a press statement that despite this, companies are more confident about future production prospects because of advertising, technology consolidation, and expectations of lower fuel costs.
The June reading suggests that the private sector has regained some momentum after a difficult second quarter, although companies are still monitoring inflationary pressures and consumer demand.
Slowing inflation
Analysis by the statistics office showed that the inflation rate slowed to 6.4% year-on-year in June, compared with 6.7% in May.
The Ministry of Finance expects the economy to grow by 5.0% this year and 5.2% next year, compared to 4.6% last year.
In another context, a group of activists and environmental organizations in Kenya launched a new lawsuit before the competent court, demanding a halt to the construction of more luxury tourist lodges within the Maasai Mara National Reserve, warning that the expansion of tourism projects threatens the reserve’s ecosystem and affects the migration routes of wild animals, especially herds of wildebeest (migratory wild animals).
The plaintiffs affirmed that a number of existing tourism establishments were built without fulfilling the necessary legal and environmental procedures, demanding the court issue orders preventing the granting of any new licenses or expansions to current establishments until the case is decided.
