Cabinet Secretary for the Ministry of Labour and Social Protection Ukur Yatanni tours the Export Processing Zone at Ruaraka on May 14, 2018. Kenya’s business shrunk to second weakest since 2016 on enhanced Covid-19 restrictions especially in Uganda and Rwanda.
According to the latest Private Sector Managers Index released Monday by Stanbic Bank, the overall Purchasing Managers Index (PMI) slipped to 51 points in June compared to 52.5 in May.
Four of the five sub-components of the PMI dropped with the exception being the Stocks of Purchases Index which rose.
Last month, Kenya instituted strict Covid-19 prevention measures among them longer curfew hours in counties that form the Lake Region Economic Bloc.
These are Bungoma, Busia, Homa Bay, Kakamega,Kisii, Kisumu, Migori, Nyamira, Siaya,Trans Nzoia, Kericho,Bomet, Nandi and Vihiga.
Uganda and Rwanda on other hand nearly locked the countries as Covid-19 deaths and infections rose.
Despite the challenges, the health of Kenya’s private sector business improved for the second month running supported by further rises in output and new orders.
According to the headline figure derived from the survey PMI, readings above 50 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
Hiring activity continued as firms faced a renewed increase in backlogs, while there were additional efforts to build inventories ahead of predicted sales growth.
Output at Kenyan companies continued to rise at the end of the second quarter, but at a modest pace. Survey panelists found that an improvement in customer demand and greater cash flow supported overall growth.
Kuria Kamau, fixed income and currency strategist at Stanbic Bank said the pace of the recovery slowed in June following the strong improvement witnessed in May when some of the stringent public health restrictions were lifted.”Both domestic and export demand increased on account of higher customer numbers and increased cash circulation, but the increase was at a slower rate than in May.