The Stanbic Bank and S&P Global Purchasing Managers’ Index (PMI) rose to 52.0 in January from December’s 51.6. Kenya’s PMI reached the highest reading in 11 months and consolidated a trend of five consecutive months above the 50.0 neutral mark—which separates an improvement from a deterioration in private-sector business conditions from the prior month. The main driver of January’s upturn was the spike in new business orders; they rose at the sharpest rate in nearly a year. Consequently, firms increased output levels, with the expansion rate reaching a four-month high. Less positively, employment levels grew only marginally as companies struggled due to cash constraints. From the side of prices, cost inflation accelerated amid higher taxes and the shilling’s depreciation.
Mulalo Madula, economist at Standard Bank, added:
“Persistently high inflation has raised concerns that price pressures will remain elevated and weigh on economic activity and consumption for some time to come. Wholesalers and retailers, on the other hand, were particularly optimistic about the year ahead, as January data showed a significant increase in business expectations for the next twelve months.”
FocusEconomics Consensus Forecast panelists expect fixed investment to expand 4.0% in 2023, which is unchanged from last month, and 4.3% in 2024.