Business activity in the private sector recorded the best performance in May since January 2023, the latest Stanbic Purchasing Managers Index (PMI) shows.
The PMI released on Wednesday, June 5 reveals that during the period under review, the readings were at 51.8, suggesting a slight recovery.
Per the report, the upward trajectory could be attributed to the reduction in input prices such as fuel prices and import costs stemming from the Shilling strengthening against the Dollar over the past month.
"After pointing to record-high rises in costs in late-2023, May survey data signalled a fall in overall input prices for the second month running, and the fastest ever outside of the 2020 pandemic lockdown," reads part of the report.
Currently, motorists in Nairobi are paying Ksh192.84 Ksh179.18 and Ksh168.76 for a litre of petrol, diesel and kerosene respectively.
Fuel prices have been on a decline in the past few months after the prices crossed the Ksh200 mark in September 2023.
On the other hand, the Shilling has been gaining against the dollar after trading at Ksh161 in January 2024. As of Wednesday, June 5, the Shilling was trading at Ksh131.03 against the US Dollar.
Besides the reduction in fuel prices and cheaper import costs, the Stanbic PMI revealed that this positive growth was attributed to reduced inflationary pressures on Kenyan companies.
The report adds that the cost of input prices has led to increased output by the local firms. Also, the rate of sales growth was the fastest recorded since January 2023.
"Kenyan firms increased their purchasing activity at a quicker rate in May amid rising sales and output requirements. The rate of purchasing growth was the fastest for 20 months and contributed to a stronger uplift in inventories," the report read in parts.
Per the report, Kenyan businesses are more confident about future activity than at the beginning of the year. Some businesses have indicated growth projections through new branches, purchasing new cars and boosting market spending.
While commenting on the report, Christopher Legillisho an economist at the bank added that the positive impact was surprising since the previous report predicted slow business activity due to the recent floods.
"Job creation continued for a fifth successive month amid larger workloads and prospects of new business. Firms also purchased larger quantities, raising inventory levels and improving their buffers," he remarked.
