Business activity rises sharply in January-Stanbic Bank

According to a monthly survey by Stanbic Bank Kenya, business activity in Kenya rose sharply in January, and this is significantly owed to the increased output and new business.

Workforce numbers increased at a faster rate, and businesses voiced more optimism for the coming year. However, inflationary pressures grew as VAT reverted to levels seen prior to the coronavirus disease 2019 (COVID-19) epidemic.

Increased outputs and New businesses

Both output and new orders increased sharply in the new year, with each growing at its quickest rate since October. The reopening of enterprises and better cash flow in the economy, according to businesses, helped to boost client spending.

Increased levels of new work resulted in a significant increase in backlogs in January, prompting a number of enterprises to hire additional employees. As a result, employment increased at a healthy pace, one of the fastest in the past year.

Input cost inflation rose in January, owing to a 16 percent increase in VAT, which prompted several suppliers to raise their prices.

Increase in Purchase expenses 

Purchase expenses climbed at their fastest rate since September 2018, owing to a combination of raw material constraints and rising demand for commodities. Customers were typically charged more as a result of greater costs, with production charges rising at the fastest rate in a year and a half.

In January, supplier capacity expansions and increased competition among suppliers resulted in a further reduction in overall delivery times. The rate of recovery has accelerated to a three-month high. Meanwhile, rising purchase activity fueled a solid increase in inventories, though the smallest in seven months.

A rise in Business expectations for 2022

Business expectations for the coming year rose considerably at the start of 2021, reaching their highest level since June. 

Businesses were hoping that they would be able to carry out development plans and invest in new capital since the COVID-19 pandemic was expected to cease. Over one-third of the enterprises polled projected an increase in output by January 2022, with the rest predicting no change.