The private sector recorded a slight increase in business activities in January in its first monthly upturn since August last year.
According to Kenya's Purchasing Managers Index, the rate of job creation increased marginally, with the rise linked to the recruitment of additional employees.
However, more companies were said to be deviating from offering long-term contracts to employees filling job opportunities created by the backlog of work.
The PMI measures the economic health of the country's sectors including agriculture, mining, manufacturing, construction, services, and retail among others.
Readings above 50 signal a significant growth in business activity, while those below show a decline.
According to the report, Kenya's PMI increased marginally to 49.8 in January compared to 48.8 in December 2023, 0.2 off the target. This slight growth was attributed to improvement in the agriculture, construction and service industries.
However, the manufacturing, wholesale and retail sectors recorded decreases, with firms remaining under pressure from insufficient cash flow.
"Sector performances were split with falls in manufacturing and wholesale and retail offsetting expansions in agriculture, construction and services," the report read in part.
"The almost-stable trend was linked to a similar picture for new order volumes, which decreased at only a fractional pace. Weak client demand and cash flow problems continued to hit sales at many companies, whereas others noted improvements in order books and foreign sales."
In contrast, the purchasing activity dropped for the fifth month in a row and at a faster pace than in December last year.
"Subsequently, inventories of inputs were largely unchanged after three successive months of growth. Lower buying meant that suppliers were able to deliver items more quickly, although the rate of improvement was only modest," the report stated.
Christopher Legilisho, Economist at Standard Bank, noted that demand for exports from the UK and Germany increased in January due to the depreciation of the Kenyan currency which trades at Ksh160 against the green buck.
“Furthermore, Kenyan businesses reported stable inventories, with slower price increases in January. Price pressures have eased; input price inflation is now at its lowest level in over a year. However, surveyed firms still face pressure from both high import costs and taxation. Moreover, survey results indicate that business confidence for the year ahead is still subdued," Legilisho stated in the report.
Since taking office, President William Ruto has been hellbent on tapping into the digital space to create jobs for unemployed youth in the country.
The latest data from the Kenya National Bureau of Statistics (KNBS), showed that the unemployment rate dropped to 960,001 in 2022 as compared to 1,055,816 in 2021. From the data, youth aged 20-24 had the highest unemployment rate of 16.8 per cent.
