Kenya's Private Sector Loses Steam As PMI Slides to 50.4

Nairobi — Kenya's private sector growth slowed in February, with business activity edging closer to stagnation as firms recorded only modest gains in new orders and largely flat output.

The latest Stanbic Bank Kenya Purchasing Managers' Index, compiled by S&P Global, shows the headline index falling to 50.4 in February from 51.9 in January.

Although the reading remains above the 50.0 threshold that separates expansion from contraction, it signals only marginal improvement in business conditions. February marked the third consecutive monthly decline and the slowest expansion in the current six-month growth run.

Surveyed firms reported that sales volumes rose only slightly, with the pace of growth the softest in six months. Output was described as close to stalling, reflecting weaker customer demand and broader macroeconomic pressures.

Purchasing activity also increased at a slower rate, while inventory accumulation eased to a seven-month low as businesses scaled back stock-building amid softer demand.

Inflationary pressures moderated during the month. Overall input costs rose at the slowest pace in three months, with purchase prices and staff costs increasing more gradually than in January. Output prices edged up only slightly, as some firms offered discounts to remain competitive.

"While the outcome was still expansionary, some businesses were hampered by increased competition and a doubtful economy," said Christopher Legilisho, Economist at Standard Bank.

"Although macroeconomic conditions have improved, the broader economy has not yet seen the benefits; sections of the private sector are still feeling the strain," he added.

Despite the slowdown, expectations for the next 12 months remained steady, with around one-fifth of firms expressing optimism about future output. Employment growth was sustained, suggesting underlying resilience in parts of the private sector.

Read the original article on Capital FM.