When Covid-19 hit the Kenyan airspace, companies were thrown into panic mode and the majority shut down and others looked for ways to remain afloat through cutting down on their workforce.
The measures put in place by companies during the month of August was felt by the economy with the Purchasing Managers’ Index (PMI) (a monthly measure of private sector activity) dropping to 53.0 from 54.2 in July.
“Sentiment improved for the first time since February, but remained relatively weak,” the IHS Markit Services PMI by Stanbic Bank of Kenya said on Thursday.
Despite falling from 54.2 in July, the index suggested that the rate of growth remained solid overall according to the index.
While export volumes grew at a record rate, employment figures fell amid efforts to cut wage costs. Although business sentiments improved for the first time since February 2020, they are still relatively weak.
“The employment index still remains below the 50 levels, largely reflecting firms scaling back on wage costs,” said Jibran Qureishi, Head of Africa Research, Stanbic Bank. “Weaker job growth indicates the underlying challenges the road ahead presents, even as business confidence has improved over the past two months.”
Kenyan companies started reporting falling sales ahead of Kenya imposing restrictions to curb the spread of coronavirus which in touched off a streak of layoffs, pay cuts, and unpaid leave from April.
President Uhuru Kenyatta has since eased some of the restrictions including the lifting of the cessation of movement that has been imposed on four counties, as well as allowing international flights in and out of the country.
With the lifting of some of the restrictions, there is an upsurge in demand for products and services from the Kenyan firms with analysts saying that the economy will start picking as the year nears the end.