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CFC
Stanbic Corporate and Investment Banking Regional Head Mike Blade (right),
Richard Willis , Director Markit Group (centre) and Jibran Qureishi ,
Economist, Global Market during the launch of Kenya purchasing manager's index
survey
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CFC
Stanbic Bank in conjunction with a leading financial information services
provider – Markit – have launched a monthly survey of business conditions in
the Kenyan private sector.
The
headline figure derived from the survey will be known as the Purchasing
Managers’ Index™(PMI™).
The
survey which has been trialed since January 2014 provides and early indication
of business in the country. It is a composite index, calculated as a weighted
average of five individual sub-components: New Orders (30%), Output (25%),
Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases
(10%).
The
Index is premised on providing the earliest, most accurate and most
comprehensive suite of economic indicators in the country and help provide
policy makers and businesses make well informed decisions. Equally, the key
indicators will provide a solid basis for investment strategies and asset
allocation.
The
latest figures (February 2015) show that the Kenyan private sector output
increased at a faster rate in February, mirroring the overall improvement in
business conditions.
Commenting
on the February figures, Jibran Qureishi, Economist at CfC Stanbic Bank said:
“The PMI index recovered in February after a slower pace of growth recorded
last month, primarily driven by rises in output and new orders. Interestingly,
the PMI seems to have lost the solid momentum witnessed towards the end of last
year, although we suspect this is transitory.”
He
added: “The decline in international oil prices and power tariffs as a result
of the geothermal component being added to the national grid should lower costs
for most firms in Kenya and will probably lead to higher output in the coming
months. Confidence within the Kenyan private sector remains high and should
continue to bode well for business conditions.”
The
rate of expansion was marked overall, helped by a healthy customer turnout.
Likewise, growth of new export business picked up since January. In fact, the
latest increase was the most marked in 14 months of data collection.
Companies
continued to hire staff in response to increased production requirements in
February. The rate of job creation accelerated in line with output and new
orders, having eased to the weakest in the survey’s history at the start of
2015.
Sharper
expansions in output and new work intakes also led to ongoing growth of
purchasing activity during February. Input buying rose at a faster pace,
contrasting with the weakest increase in pre-production inventories since the
survey began in January 2014.
A
by-product of higher new work inflows was a return to growth for backlogs of
work. However, the level of outstanding business rose only fractionally during
the month. The February data signaled that
the overall increase was driven by modest rises in both purchase prices and
staff costs during the month. Subsequently, prices charged by Kenyan private
sector firms rose in the month under review, albeit at a historically muted
pace.
