Busi­nesses im­prove, cre­ate jobs – sur­vey

Over­all busi­ness con­di­tions in­di­ca­tor rose 15.9 per cent in Septem­ber to 76, its high­est level since De­cem­ber 2014

The Star (Kenya) - - News - WEITERE MWITA @MwitaMartin

Pri­vate sec­tor ac­tiv­i­ties im­proved to a five-month high last month, a monthly mar­ket sur­vey sug­gested yes­ter­day, cit­ing in­creased new or­ders, pro­duc­tion and job op­por­tu­ni­ties.

The Stan­dard Char­tered-MNI Busi­ness Sen­ti­ment for Kenya rose to 63.7 from 58.7 in Au­gust, the high­est level since De­cem­ber 2015.

The monthly re­view shows new or­ders surged to a new 2016 high, with the pro­duc­tion and em­ploy­ment indi­ca­tors also ris­ing.

Firms re­ported a pick-up in busi­ness ac­tiv­ity with the over­all busi­ness con­di­tions in­di­ca­tor ris­ing 15.9 per cent in Septem­ber to 76, its high­est level since De­cem­ber 2014. Three of the five com­po­nents that make up the head­line in­di­ca­tor posted gains with busi­nesses re­port­ing a strong surge in de­mand as new or­ders rose by 16.7 per cent month on month.

“Pro­duc­tion and em­ploy­ment indi­ca­tors also in­creased. To­gether, these three indi­ca­tors con­trib­ute 75 per cent of the head­line BSI print. Firms ex­pect up­beat con­di­tions to be sus­tained, and are in­creas­ing their hir­ing as a re­sult,” the re­port states.

The Stan­dard Char­tered Bank Chief Econ­o­mist for Africa Razia Khan how­ever warned that credit to Kenyan busi­nesses could fall sharply in the months ahead, due to the cap­ping of in­ter­est rates.

Razia said banks are no longer able to price for risk.

“Weak credit growth trends in the run-up to new leg­is­la­tion cap­ping loan rates has emerged as a par­tic­u­lar con­cern. Should Kenya’s weak credit growth trend per­sist, the BSI is likely to de­te­ri­o­rate fur­ther in the months ahead de­spite the op­ti­mism seen in Septem­ber,” Razia said.

In­ven­tory lev­els of Kenyan busi­nesses reached a se­ries low in Septem­ber, fall­ing 39.4 per cent from Au­gust.

New or­ders are likely to re­main strong in quar­ter four of 2016, the re­port states, as the fes­tive sea­son ap­proaches.

“With in­ven­tory lev­els fall­ing, com­pa­nies have be­gun to in­crease out­put and in­tend to ex­pand pro­duc­tive ca­pac­ity in the next quar­ter. The em­ploy­ment in­di­ca­tor moved back above the 50 break-even level as firms re­ported in­creas­ing em­ploy­ment to boost pro­duc­tion,” it states.

/ FILE

Stan­dard Char­tered Bank Chief Econ­o­mist Razia Khan at a past me­dia brief­ing

Newspapers in English

Newspapers from Kenya

© PressReader. All rights reserved.