Latest Kenya Purchasing Managers’ Index (PMI) pointed to a strengthening of growth in the private sector economy in November as business activity and new work both expanded at the sharpest rates in over five years.

In a press statement, firms experienced improving customer sales, helped by relatively soft inflationary pressures, as well as successful new product launches and marketing campaigns. Moreover, purchases of inputs rose, while employment growth quickened from October.

With readings above 50.0 signalling an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. November recorded a reading of 55.0 up from 52.5 in October and at its highest since October 2020.

Surveyed companies frequently noted that improved purchasing power among customers contributed to higher sales volumes.

“This trend was partly linked to a moderation in inflationary pressures, as evidenced by the survey data. In fact, selling charges increased only slightly and at the slowest rate since August, while input costs rose to the smallest extent in 18 months,” read the statement.

Panellists also highlighted the effectiveness of new marketing initiatives, increased customer referrals, and rising demand for innovative products. Notably, sales growth was broad-based in November, with all five monitored sectors reporting an increase compared to the previous month.

Further, business activity expanded at a sharper rate over the course of November with the pace of growth being the fastest seen in just over five years. Likewise, firms increased their purchases of inputs greatly in November in an effort to meet client demand and shore up inventories.

Similarly, supplier delivery times improved in November with qualitative feedback indicating that increased competition among vendors had driven faster deliveries as they sought to strengthen business relationships.

“Coupled with the marked rise in purchases, this contributed to a robust expansion of input inventories during the latest survey period,” the statement read.

Although input demand rose, firms signalled that there was little impact on purchase prices. Where an increase in costs was observed, comments mainly linked this to higher tax burdens.

On the other hand, the labour market showed signs of strengthening in November amid rising demand. Employment increased for the tenth consecutive month, with the latest growth being the second fastest since August 2023.

Looking ahead to the next 12 months, Kenyan companies maintained a generally positive outlook for private sector output. However, this optimism softened for the third consecutive month since August’s recent high.

Firms anticipating increased activity primarily cited planned marketing campaigns, business expansion initiatives, and efforts to diversify their product and service offerings.

• A Tell MKNA by Michael Omondi