Firms shed jobs as business activities collapse in April
Published on: May 06, 2021 08:00 (EAT)
Local private firms cut jobs for the first time since September 2020 in April as activity shrunk following reimposed containment measures. This is according to data released by the monthly Stanbic Bank Purchasing Managers Index (PMI) whose headline reading fell sharply to 41.5 points from a higher 50.6 points in March. Survey data from the PMI showed the first decline in activity and new business since June 2020. “The partial lock-down in five counties including Nairobi, and increased curfew hours, had a considerable impact on movement and demand, with the decrease in new orders the most marked since May last year,” noted the survey. The registered job cuts by firms were preceded by increased restrictions on businesses in several counties with 43 per cent of the survey’s respondents indicating an overall decline in output levels. “The increased restrictions resulted in low demand which forced firms to cut back on output and spending on inputs,” said Stanbic Bank Fixed Income and Currency Strategist Kuria Kamau. At the same time, input costs rose on the back of higher fuel prices and raw material shortages linked to global supply chain issues. Moreover, companies registered low optimism levels for future output growth citing the severe impact of lockdown measures. The future output index which measures business expectations over the next 12-months period fell to a new historical low. Private sector activity is nevertheless expected to rebound this month following revised directives ending the five-county lockdown and the further reinstatement of curfew hours to between 10pm and 4am on May 1. The return to lesser restriction has allowed the resumption of sectors such as hospitality and travel which had been greatly undermined by tougher measures imposed on March 26.