Relief for Workers as Firms Signal End to Pay Raise Freeze
After months of stasis, Kenya’s private sector payrolls began to rise in April, indicating increasing hiring and a promising future for products and services despite growing concerns about disruptive floods.
According to the results of the Purchasing Managers Index (PMI) survey conducted by Stanbic Bank Kenya, wages and benefits spending increased at the quickest rate in the previous eight months.
Based on feedback from around 400 corporate managers, it was observed that most major industries, including manufacturing, services, mining, wholesale & retail, agriculture, and manufacturing, saw a little increase in employee compensation.
The monthly poll revealed that the only industry with a decrease in staff costs was construction. Christopher Legilisho, an economist with Standard Bank, the parent company of Stanbic Bank, based in South Africa, stated in the PMI report on Monday that “wage pressures were still prevalent as firms continued to hire staff and increase inventories because they anticipate improved demand.”
This followed businesses hiring more people for the fourth consecutive month in an effort to reduce backlogs and increase sales. The hiring rate reached a 13-month high in February, marking the peak of the job creation pace. After slowing down in March, hiring resumed in April.
According to the PMI, employment prospects in the construction sector increased most in April, suggesting that contractors were hiring at lower rates given the sector’s general decrease in staff expenses.
When compared to the previous month, Kenya’s private sector activity generally increased in April, reducing inflationary pressures in the context of stable exchange rates.
The private sector’s output, new orders, and employment are measured by the Stanbic Kenya PMI, which increased slightly to 50.1 percent in March from 49.7 percent.
This indicated that company transactions were mostly stable from month to month because PMI ratings over 50 indicate expansion and readings below that threshold indicate contraction.
“Despite worries from some businesses about the heavy rainfall across the country, output and new orders were neutral during the month as firms reported a balanced inflow of new business,” Mr. Legilisho stated.
“Over the course of the month, there was a noticeable increase in the number of jobs created, quantities purchased, and inventories held by firms, which is indicative of rising workloads and potential for new business.”
The Kenya National Bureau of Statistics reports that due to declining prices for food and energy, inflation—a measure of the increase in the cost of goods and services over the previous year—grew in April at the slowest rate in 42 months, at 5.0 percent.
On the other hand, the shilling was relatively constant, depreciating 1.12 percent at the end of the month from its beginning of 133.80 units versus the US dollar, which was stronger globally.
“With the exception of construction and agriculture, input, purchase, and output prices all decreased in April, further indicating a relaxation of price pressures in the majority of the sectors surveyed. This supports our assessment, according to the Stanbic economist, that inflationary pressures have decreased.
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Relief for Workers as Firms Signal End to Pay Raise Freeze
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