6 February 2018

Kenya Industry Output Up First Time in 2 Years

Kenya's manufacturing activity expanded for the first time in two years in January this year on the back of improving business conditions, according to the latest Stanbic Bank-HIS Markit Purchasing Manager's Index.

The study says private sector activity slid slightly to 52.9 points in January from 53 points in December signalling "a solid improvement in business conditions."

Despite the fall the study shows that overall private sector growth or buying activity was the second-strongest since December 2016.

"Output rose to its highest level since January 2016, a trend we suspect is likely to persist over the coming year," said Jibran Qureishi, regional economist east Africa at Stanbic Bank.

Mr Qureishi projected that the business conditions are likely to look up in the first half of 2018 owing to a revamped agriculture.

"Notably, the contraction we saw in the agriculture sub-sector in the first half of 2017 is likely to reverse in the half of 2018, which should subsequently provide tailwinds for other sectors to flourish," he said.

"Furthermore, the horticulture and floriculture sub-sectors should also perform well over the coming months largely underpinned by the ongoing recovery in the Eurozone as well as the recent appreciation of the Euro currency."

The study linked the increase in output levels to more favourable demand conditions and the acquisition of new clients.

"Although the rate of growth softened slightly from December's 11-month high, the expansion remained strong overall."

Those polled according to the study suggested that the latest rise in new orders stemmed from greater client demand.

Many businesses have suffered a slowdown blamed on political uncertainty brought about by the extended electioneering.

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