(Adds dropped name economist in line 2)
NAIROBI (Reuters) – Kenyan private sector growth slowed in October after expanding a month earlier for the first time since March, a survey showed on Thursday, as rising prices led to lower consumer spending and higher operating costs.
The S&P Global Kenya Purchasing Managers’ Index (PMI) fell to 50.2 in October from 51.7 a month earlier. Readings above 50.0 signal growth in business activity, while those below that point to a contraction.
“Ongoing concerns about the rising cost of living led to a softer expansion in new orders and a renewed drop in output,” S&P Global said in comments accompanying the survey.
“Rising living costs dampened client spending in many cases, contributing to lower sales volumes in the construction, services and wholesale and retail sectors. Agriculture and manufacturing were the only areas to record growth.”
Kenya is experiencing rising inflation, which the central bank considers “the number one evil” facing the economy.
Annual consumer price inflation rose to 9.6% in October from 9.2% in September, data from the statistics office showed.
“If price pressures persist and firms continue to pass on a higher share of rising input cost burdens to output charges, demand may weaken in the short to medium term, slowing the overall rate of improvement in Kenya’s business environment,” Mulalo Madula, an economist at Stanbic Bank, which is involved in the survey, said.
(Reporting by George Obulutsa; Editing by Hugh Lawson)
