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NAIROBI, May 4 (Reuters) - Activity in Kenya's private sector stabilised in April after a contraction in the previous month, as new orders for firms in the local market improved, a survey showed on Thursday.
The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI) rebounded to 50.3 after dropping in March to 48.5, the lowest reading since the survey began in January 2014. A reading above 50.0 indicates growth and anything below is a contraction.
"Domestic demand is showing some signs of recovery; however we would still urge caution for now," said Jibran Qureishi, regional economist for East Africa at Stanbic Bank.
A reported outbreak of fall army worms in maize fields could curb food production and cause shortages again, putting pressure on the economy, he warned.
Voters go to the polls in August to pick a president, parliamentarians and local officials. Violence following past elections, most notably after a disputed presidential result in 2007, makes some investors nervous about this year's poll.
"Political risk is likely to remain elevated which could prompt the private sector to scale back on investment spending," Qureishi said.
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Reporting by Duncan Miriri; Editing by Catherine Evans