Increase in demand pushes up new hires 

Improved activity. The Stanbic survey indicates that there has been improvement in private sector activity across all surveyed sectors apart from agriculture. Photo / File 

What you need to know:

  • An increase in new orders in more than a year has seen several companies reinforce staff numbers to match demand with output

Companies have reported an increase in staffing levels for the 14th month in May, signaling a steady increase in private sector activity, according to a survey by Stanbic Bank. 

The Purchasing Managers’ Index, which conducts monthly interviews among chief executives and purchasing managers, indicates that an increase in new orders in more than a year has forced several companies to reinforce their employee numbers to match demand with output. 

“Firms increased staffing levels for the 14th month, including both part-time and full-time workers due to increased output,” Mr Christopher Legilisho, a Stanbic Bank economist, said, noting that May was the second successive month of buoyant private sector activity as output and new orders gained from robust consumer demand, referrals, and newly acquired clients. 

The survey also noted that almost all surveyed sectors, among which included retail and wholesale, construction and trade, apart from agriculture had recorded an increase in activity with new orders increasing across the board.

During May, the Purchasing Managers’ Index, noted an increase in staffing levels had pushed up staff costs due to an expansion of the wage bill and payment of bonuses to motivate workers, who continue to shoulder an increase in the cost of living, amid stagnation in salaries and wages. 

Mr Legilisho further noted that the improvement in employment levels had thus allowed businesses to clear backlogs.  

The survey also indicates that business activity rose for the second month in May due to sustained improvements in demand and a more upbeat sales environment, which in the month saw the Purchasing Managers Index increase to 54.1 in May from 52.6 in April, signaling a further improvement in business conditions across the private sector. 

During May, the survey noted that new sales rose in all monitored sectors, apart from agriculture but there was an overall increase in operating expenses, partly due to an increase in wage bills, utility costs, and raw materials. 

However, product prices increased for the 14th month in May as businesses sought to pass- through higher costs to customers, but business executives remained optimistic with the outlook for output over the next year remaining strong with an expected increase in workforce numbers and input buying. 

Four of the five monitored sectors signaled greater employment, with only construction bucking the wider trend and recording a decrease in staffing numbers.

The survey noted that there was an upturn in purchasing activity and a further improvement in suppliers’ delivery times supported by building of stocks of purchases, while inventories rose for the third successive month in May.

Business executives indicated that the increase in output, if sustained, would compensate for an increase in input prices that continue to increase, amid rising inflationary pressures. 

The optimism, the survey noted, was due to a build-up in new clients, a further improvement in demand conditions, and softer upticks in input prices.