Hello

Your subscription is almost coming to an end. Don’t miss out on the great content on Nation.Africa

Ready to continue your informative journey with us?

Hello

Your premium access has ended, but the best of Nation.Africa is still within reach. Renew now to unlock exclusive stories and in-depth features.

Reclaim your full access. Click below to renew.

Job losses persist despite ease of Covid restrictions

A sacked employee receives his termination letter. Federation of Kenya Employers says 604 firms fired workers over Covid shocks.

Photo credit: File | Shutterstock

What you need to know:

  • Stanbic Bank Kenya’s Purchasing Managers Index (PMI) — a monthly measure of private sector activity — slowed to 53 from 54.2 July largely on falling workforce count.
  • President Uhuru Kenyatta allowed resumption of international flights from August 1 a month after domestic flights had restarted and cessation of movement into and out of Nairobi and Mombasa lifted.

Persistent layoffs in corporate Kenya hurt growth in private sector activity in August, findings of a closely-watched survey said on Wednesday, despite marked rise in demand on progressive easing of Covid-19 restrictions.

Stanbic Bank Kenya’s Purchasing Managers Index (PMI) — a monthly measure of private sector activity — slowed to 53 from 54.2 July largely on falling workforce count.

Weaker jobs growth

The index, however, stayed above the 50 mark that signals growth in business deals for the second month in a row being the first time this year helped by a “sharp upturn in new orders” by firms. “A second consecutive month of growth continues to indicate that the private sector is moderately emerging from the trough in April,” Stanbic Bank Head of Africa Research Jibran Qureishi said in the PMI report.

 “That said, the employment sub-component index still remains below the 50 level, largely reflecting firms scaling back on wage costs. Weaker jobs growth indicates the underlying challenges the road ahead presents, even as business confidence has improved over the past two months."

President Uhuru Kenyatta allowed resumption of international flights from August 1 a month after domestic flights had restarted and cessation of movement into and out of Nairobi and Mombasa lifted.

This helped lift demand for goods and services, which remained solid last month with orders from abroad jumping at a record pace on easing of lockdowns largely in Europe.

Domestic production

Domestic production and sales were, nonetheless, softer last month compared with July as firms passed higher cost of inputs, which hit a four-month high onto consumers, slightly raising selling prices.

Companies started reporting falling sales ahead of Kenya imposing restrictions to curb the spread of coronavirus which in touched off a streak of layoffs, pay cuts and unpaid leave from April. The impact of the pandemic has battered the economy, with the Treasury projecting growth will slow to 1.8 percent in the worst case scenario this year from 5.4 percent in 2019.

Job cuts which had in July grew at weakest pace since April, deepened slightly last month.