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Firms continue shedding jobs despite rise private performance

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Companies continued shedding jobs in July despite activities in Kenya’s private sector rising at fastest pace in a year on the back of a gradual easing of coronavirus lockdown measures.

Stanbic Bank Kenya’s Purchasing Managers Index (PMI) — a monthly measure of private sector activity — rose to 54.2 from 46.6 in June, marking the first growth since December 2019 and touching the highest levels since June last year.

Readings above 50.0 indicate an expansion and July is first month this year to show growth

But firms continued to shed jobs in the month, the survey found, albeit at a slower pace than in the previous months in an environment where thousands have been laid off and some placed on unpaid leave.

“The removal of county travel restrictions supported output and business sentiment in July,” said Jibran Qureishi, head of Africa Research at Stanbic Bank, referring to the opening up of the capital Nairobi and the port city of Mombasa.

“This enabled firms to receive inputs much quicker, as supplier delivery times improved (at the fastest rate for 16 months).”

He said the outlook was uncertain, however, and that future expansion plans are still not firmed up.

The government cut its GDP growth forecast for this year to about 2.5 per cent due to the pandemic, from an initial six per cent.

Firms have since March largely resorted to laying off workers, slashing salaries and adopting unpaid leave policies to cut operating costs amid depressed demand which started before the global coronavirus struck.

The PMI findings — based on feedback from corporate managers in key sectors such as manufacturing, services and agriculture — suggests business deals were on a downward in the first six months of the year.