The Stanbic Bank Kenya PMI for December 2024 edged lower to 50.6 from 50.9 in November, but remained above the 50-point mark for the third consecutive month, indicating sustained expansion in the private sector.
The Stanbic Bank Kenya PMI for December 2024 indicates a mixed picture for the Kenyan private sector. While there are positive signs of growth in output, new orders, and employment, the rising inflationary pressures and weak business confidence pose potential challenges for the sector going forward.
The key drivers of growth included:
- Increased Output & New Orders: Businesses experienced a rise in output primarily driven by an increase in new orders. This growth was attributed to factors like improved customer purchasing power, successful marketing campaigns, and new bookings.
- Employment Growth: While marginal, employment levels saw a slight increase, marking the first workforce expansion since July. This allowed firms to clear backlogs.
Inflationary pressures in December according to the report included:
- Rising Input Costs: The rate of input price inflation accelerated significantly, driven by factors such as:
-Stronger Input Demand: Increased demand for inputs led to higher supplier prices.
-Currency Weakness: The depreciation of the Kenyan Shilling against major currencies increased the cost of imported inputs.
-Heightened Tax Burdens: Increased taxes, particularly in the agriculture and manufacturing sectors, contributed to higher input costs.
2. Selling Price Increases: To protect their profit margins, Kenyan firms increased their selling prices at the fastest pace in 2024.
Other key findings include:
- Inventory Reduction: Businesses reduced their inventory levels to avoid wastage, leading to the first decline in inventories in five months.
- Weak Outlook: Business optimism for the next 12 months remained subdued, with only 5% of surveyed firms expecting output to rise.