September records highest employment rate as PMI drops to 5-month low

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NAIROBI, Kenya, October 5 – September recorded the highest employment rate since January, according to Stanbic Bank Kenya’s Purchasing Managers’ Index (PMI), noting that the agriculture and construction sectors recorded the highest rate.

Despite improving employment and purchasing levels, the survey noted that future production prospects remain relatively weak due to the uncertainty surrounding inflation and COVID-19.

Overall, the month was marked by a slowdown in business activity compared to August, with the PMI falling to its lowest level in five months at 50.4 points from 51.1.

The July PMI stood at 50.6.

The survey attributed the drop to rising costs of living which weighed on consumer spending and new orders.

“There have been numerous reports that an increase in the cost of living has weakened consumer spending, resulting in a lower rate of total sales growth – and only marginal. Thereafter, the rate of expansion of trade activity was the slowest observed since the return to growth after the decline induced by the April lockdown, ”he said.

He specifically noted that the rise in the prices of gasoline, diesel and kerosene in particular had resulted in an increase in the rate of inflation of input costs and production costs.

“Companies have found that the price increase is in addition to purchase prices, which have risen sharply. Faced with higher cost charges, businesses have significantly increased their selling costs since February, ”he said.

“While export demand has grown at the fastest rate in 13 months, improving domestic demand has been negatively affected by an increase in commodity prices. Companies increased production prices to protect their profit margins following higher fuel prices during the month, ”said Kuria Kamau, fixed income and foreign exchange strategist at Stanbic Bank.

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