Kenya private sector activity stagnates in May

Kenya’s private sector activity stagnated last month as firms reported a drop in output and new orders mainly due to weak consumer demand ahead of a national election in August.

The Markit Stanbic Bank Kenya Purchasing Managers’ Index (PMI) dropped to 49.9 from 50.3 the previous month, falling below the 50.0 level which separates growth and contraction.

Jibran Qureishi, regional economist for East Africa at Stanbic Bank, said respondents to the survey blamed the contraction on tougher business conditions.

“Panelists continue to attribute the deteriorating conditions to financial constraints and weak consumer demand due to the upcoming elections in August,” he said.

Voters will pick a president, parliament and local authorities on Aug. 8 and investors and consumers are taking a wait-and-see attitude due to concerns of potential violence during the polls.

About 1,250 people were killed in ethnic violence following a disputed presidential election in 2007. President Uhuru Kenyatta is seeking a second term of office and he is facing veteran opposition leader Raila Odinga in the election.

Kenya’s economy has been buffeted this year by a drought that has sent food prices higher and driven up inflation. It has also been hurt by slowing private sector credit growth.

-Detailed PMI data are only available under licence from Markit and customers need to apply to Markit for a licence.

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