Business Activity Drops for Fifth Month Running- Stanbic PMI Report

Business activity in the country decreased for the fifth month in a row in January, the latest Stanbic PMI released on February 5 shows.

According to the report released on Monday, business owners, during the period under review, singled out three key factors affecting business including; taxation, the rising cost of fuel and an increase in import prices.

The increased taxation can be attributed to the enactment of the Finance Act, 2023 which introduced a slew of new and increased taxes which the business community has said, have negatively impacted their establishments.

“Business activity at Kenyan firms fell for the fifth month running in January, albeit at the slowest pace in this sequence and only slightly,” read part of the report.

Economist Christopher Legilisho noted that Kenyan businesses reported stable inventories with slower price increases in January.

“However, surveyed firms still face pressure from both high import costs and taxation. Moreover, survey results indicate that business confidence for the year ahead is still subdued,” he stated.

In January, purchasing activity dropped for the fifth month in a row, at a faster pace than in December 2023.

Despite the decline in business activity, the report indicated that Kenya experienced an improvement in business conditions in January.

The PMI also shows that companies began hiring for the first time in five months in January 2024, which could serve as an indicator of a recovering economy.

“Business activity and new order volumes dropped only fractionally, while firms expanded their workforce numbers for the first time in five months,” read part of the report.

This comes even as business owners have in the past months been lamenting over the increased taxes which has prompted them to resort to calling upon the government to intervene to revise some of the policies hurting the larger economy.