Kenyan firms saw a greater improvement in business conditions midway through the final quarter of 2024. Sales grew at the fastest pace since May, leading to a moderate increase in output and stronger purchasing activity.
Accelerated growth momentum contributed to higher price pressures, as input costs rose solidly from October. Consequently, selling prices increased to the greatest extent for nine months.
The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
Posting 50.9, up from 50.4, the PMI indicated a sustained expansion in the Kenyan private sector during November. The rate of growth was the highest in six months, but only marginal. Supporting business conditions was a moderate increase in new order volumes.
Companies in the survey panel often highlighted an improvement in customer spend and increased travel driving sales higher. The upturn was concentrated in the services and wholesale & retail segments however, whereas agriculture, manufacturing and construction recorded declines in new orders.
Nevertheless, the overall rise in sales, which was the best for six months, led to an expansion in private sector activity in November. The rate of output growth picked up from October and climbed above the series average. Higher output requirements supported a solid uplift in purchasing activity that was the fastest observed since September 2022.
Supplier delivery times continued to shorten in November, although the pace of improvement remained marginal. Firms often noted that strong competition among vendors and better material supply aided deliveries. This in turn supported an uplift in stocks, albeit the softest recorded since August.
Despite sales growth rising, job creation across the Kenyan economy was tempered in November. Whilst some businesses took on more staff amidst higher workloads and greater marketing budgets, most panelists kept their workforces stable.
Outstanding work volumes ticked up after a fresh decline in October. On prices, the latest survey data pointed to an acceleration of input cost inflation in the private sector. Overall costs increased at the fastest pace in three months, which firms largely attributed to greater taxes on purchased items.
Consequently, average selling prices rose at the strongest pace in nine months, with inflation quickening from October. Notably, all five broad sectors saw charges increase, which panelists linked to higher costs and strengthening customer demand.
Business expectations remained relatively weak and softened slightly since the start of the fourth quarter. Just 8% of firms expect activity to rise over the next 12 months, with comments relating positivity to new marketing, digital technologies and branch openings.
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