Private sector confidence hits record low on costly supplies

private sector

Private sector business conditions deteriorated last month, hurt by a decrease in customer demand in response to rising consumer prices and living costs as well as supply shortfalls for some goods.

For the first time in three months, the headline Stanbic Bank Kenya Purchasers Managers Index dropped below the 50.0 no-change mark in April, falling to a reading of 49.5 from 50.5 in March.

The latest Stanbic Bank Kenya Purchasers Managers Index indicates that this month a solid fall in output was registered as firms experienced supply shortfalls for a number of items due to the war in Ukraine and a near-record rise in input prices.

Input costs rose to the greatest extent in over eight years. Subsequently, retail prices were raised at the quickest rate in the survey’s history, while business confidence dropped to a fresh record low.

Clients reduced their spending due to marked increases in selling prices, fuel costs and other living expenses.

For the first time in three months, the headline Stanbic Bank Kenya Purchasers Managers Index dropped below the 50.0 no-change mark in April, falling to a reading of 49.5 from 50.5 in March.

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

The survey indicates that the decline in operating conditions was underlined by a renewed fall in new order volumes in April.

The decrease was related to clients reducing their spending due to marked increases in selling prices, fuel costs and other living expenses. With sales falling, Kenyan businesses reduced their activity for the third time in the past four months in April.

The reduction was solid and faster than in March, with declines seen in the construction, agriculture and services sectors.

Business confidence regarding future activity dropped to a record low for the second successive month in April on concerns over rapid price inflation and reduced client spending meaning that only 9% of businesses gave a positive outlook.

  

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