NAIROBI, Kenya’s private sector expansion gathered momentum in the month of December, having stalled somewhat just two months earlier, according to the CfC Stanbic Bank Purchasing Managers’ Index (PMI) end of year report.

Growth rates in output, new work and employment all accelerated, as did that for input buying. In particular, the latest rise in output was the most marked seen throughout 2015, the report says.

Rising from 53.7 in November to 55.5, the seasonally adjusted PMI highlighted a positive end to 2015 for Kenya’s private sector. The December reading was the highest in eight months, and pointed to a marked improvement in business conditions.

“The private sector closed the year on a strong note as the PMI rose to an eight-month high of 55.5 from 53.7 in the previous month and a survey-record low of 51.7 in October. We expect the Kenyan economy to expand by 5.3 per cent in 2015, predicated on a robust performance mainly in the construction sector,” said Jibran Qureishi, Regional Economist at CfC Stanbic Bank here.

“Likewise, despite the ongoing challenges in the tourism sector for the most part of 2015 and erratic weather patterns that suppressed agricultural production in the first half of the year, the Kenyan private sector has weathered the storm in what we think was an incredibly challenging global environment in 2015.

“Underpinning the pick-up in momentum was a robust increase in output during December. Activity growth quickened to a one-year high, helped by a combination of stronger client demand and the opening of new branches.”

According to the report, new business showed a similar trend in growth with the latest expansion the sharpest since June, largely accelerated by enhanced marketing and higher new export work. Foreign orders rose only modestly following a stagnation in the prior month.

Growth of the sector as a whole was boosted further by faster job creation in December. The rate of hiring picked up to the quickest in seven months, as firms redoubled their efforts to expand operating capacity.

On the price front, total input costs rose more slowly in December. The easing centred on a slightly weaker rise in purchase prices, as salary growth hit a four-month high.

The overall rate of inflation was nevertheless solid overall as a result of higher raw material and transportation costs caused in part by the weakening of the Kenyan shilling.

Meanwhile, tariffs rose at the fastest rate since August, with panellists reportedly able to pass on higher costs due to the strength of client demand.

Source: KNA