Business sentiment remained high although high prices and poorer consumers led to a decline in the Stanbic Bank Purchasers Manager Index.
The PMI fell below the 50 psychological mark for the first time in 17 months to hit 49.3 in April from 51.0 in March.
“Output charges at Kenyan firms dropped, as firms looked for new customers whilst sales growth slid to a halt,” said Stanbic Bank East Africa Regional Economist Jibran Qureishi.
In such moments companies would lower the prices to stimulate demand but they found it difficult given an increase in fuel prices and inflation effect on other inputs.
Businesses also lacked cash to increase output owing to delayed payments by the National and county governments.
“Various panelists continue to lament a lack of ‘money circulation’ which is creating cash flow issues. Clearly, the government isn’t adequately addressing the arrears issue owed to the private sector,” said Qureishi.
As output and new orders reduced, firms cut jobs slightly in April, the first fall in employment numbers since late-2017.
The dry weather especially hit tea production which was not offset by higher prices since the global market has sufficient supplies.