The Kenya PMI® indicated a build-up of price inflation at the end of 2024, as a sharp increase in input costs led private sector firms to raise selling prices at the quickest rate since December 2023.
The pick-up in cost burdens came as sustained growth in new orders and business activity prompted the fastest expansion in input buying for over two years.
The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI). Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration.
The headline PMI stood at 50.6 in December, indicating another marginal improvement in the health of the Kenyan private sector. The index dropped slightly from 50.9 in November but was above the 50.0 neutral mark for the third month running.
The positive PMI reading was driven by three of its subcomponents, as output, new orders, and employment all expanded for the third straight month. Notably, this marked the first full quarter of private sector output growth since the final quarter of 2021.
Business output generally rose due to an increase in new order intakes, according to firms monitored by the survey. New orders grew moderately, with the upturn easing from November. Several panelists mentioned an improvement in purchasing power at customers, alongside new bookings and successful advertising campaigns.
Rising demand helped to sustain the current trend of input buying growth in December, with a rise in purchases registered for the fifth month in a row. Furthermore, the increase was the sharpest recorded since September 2022. Stronger input demand encouraged suppliers to raise their fees, according to several surveyed firms.
Currency weakness and heightened tax burdens were also commonly noted. Despite a slightly lower average wage bill, the rate of overall input price inflation accelerated to its quickest for 11 months.
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