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Stanbic survey reports continued business improvement
The Stanbic survey indicates that businesses have been growing their inventories and improving their staff numbers to meet new orders. Photo / File
What you need to know:
- The Purchasing Managers’ Index indicates that despite higher purchase costs, firms raised their input buying, with pre-production inventories also growing
The business environment has registered an eighth successive monthly improvement in suppliers’ delivery time, aiding companies in to build safety stocks.
The Stanbic Bank Purchasing Managers’ Index indicates that despite higher purchase costs, firms raised their input buying in July, as pre-production inventories also grew amid efforts to stockpile materials.
This was supported by an increase in new orders and greater client demand, which saw new orders grow for the fourth month at the start of the third quarter, while upturn was widespread across all five monitored sectors, with firms linking the expansion to new client wins.
However, in July there was a further intensification of cost pressures with input prices rising again for both purchase and staff due to increased costs on foodstuff, utility, rent, paper, and timber, and an uptick in wage bills.
Industry was the only sector to record a decrease in wage bills.
Staff costs increased for a fifth consecutive month at the start of the second half of the year, while employment rose for the 16th month, with backlogs of work falling in each month as firms noted sufficient capacity to process incomplete business.
The Purchasing Managers’ Index, thus increased to 53.7 from 51.9 in June, which signals a fourth consecutive monthly improvement in the health of the private sector.
Mr Christopher Legilisho, a Stanbic economist, said the July performance revealed a robust private sector performance, noting that for the fourth month now, surveyed firms had indicated strong output and new orders, linked to strong client demand across all economic sectors, with companies upbeat of client demand conditions persisting over the next 12 months.
“Firms have, therefore, increased employment, input buying, and stocks of raw materials to support increased workloads from the higher output and new customer orders,” he said, noting that total input prices, purchase prices, and output prices increased in July, driven by wage bill pressures as well as the higher cost of raw materials, utilities, and rental prices across all surveyed sectors.
