Corporate leaders have signalled plans to expand businesses over the next one year for the first time in six months, pointing to an uptick in economic prospects on falling operating and interest rates.
Findings of Stanbic Bank Kenya’s Purchasing Managers Index (PMI) for October suggest confidence among CEOs in future growth has started picking up.
A majority of firms surveyed indicated they plan to invest in new branches and ramp up budgets for marketing campaigns to boost sales in anticipation of greater demand for goods and services towards the year end and 2025. “For the first time since April, the Future Output Index rose month-on-month during October. Firms anticipating an expansion in output often noted plans to open new outlets. Investment into products, marketing, and digital platforms were also mentioned,” analysts at Stanbic Bank and American analytics firm, S&P Global, wrote in the PMI report for October.
Businesses and households have been battling a biting lack of money in circulation in a softening economic setting for the better part of the year, a situation which was from June compounded by political instability that followed deadly youth-led protests against new taxes and poor governance.
That exacerbated economic uncertainty with consumers delaying spending decisions, hurting sales, and prompting companies to slow down output.
“According to surveyed businesses, rising sales and greater client interest drove the increase in activity in October. That said, the overall uplift in sales was only fractional, as many firms continued to struggle with cash flow constraints, tough economic conditions, rising costs, and political uncertainty,” the research analysts wrote in the PMI report.
“The slight rise in output at Kenyan firms led to a similarly mild uptick in employment levels. Nonetheless, this marked the first instance of workforce growth since July, which allowed for a fresh depletion of backlogs of work.”
The recovery in private sector activity came in a month average prices of goods and services, technically called inflation, rose 2.7 per cent compared with the year before — the softest growth since May 2007. This was largely on a 4.3 percent rise in average prices of food items compared with 7.9 per cent a year earlier, while fuel prices fell 1.7 per cent from a 13.1 per cent jump.
