Kenya’s business confidence continues to decline two months before the General Elections scheduled for August 8, the Stanbic Bank Purchasing Managers’ Index (PMI) has revealed.
The survey noted that the decline has further been compounded by uncertainty over the supply chain, inflation, and geopolitical tensions caused by the Ukraine-Russia war.
According to the survey which was conducted between May 12-27, business confidence registered a survey-record low for the third month running. Only eight per cent of the 400 managers of private sector companies in Kenya forecasted an expansion in activity over the coming year.
“Expectations across agriculture, mining, manufacturing, construction, wholesale, retail, and services were in positive territory in May, albeit relatively subdued.” the survey noted.
Overall, Kenya’s economic activity contracted for the second consecutive month in May with the PMI dropping to 48.2 from 49.5 in May; readings above 50.0 signal an improvement in business conditions from the previous month, while readings below 50.0 show a deterioration.
“The modest decline in business conditions reflected sustained falls in both output and new orders, as well as a renewed drop in employment. Kuria Kamau, Fixed Income and Currency Strategist at Stanbic Bank.
The costs of producing goods and services remained at an 8-year high driven by rising fuel prices, higher taxes, and input shortages which forced many firms to scale back on output and employment levels.
The rise in output prices, in turn, led to a reduction in domestic demand as clients cut back on spending due to the rising cost of living.