Kenya’s private sector ended the first half of 2025 on a turbulent note, as business activity contracted for the second consecutive month in June.
- •The latest Stanbic Purchasing Managers’ Index (PMI) fell to 48.6 from May’s 49.6, marking the sharpest decline in business conditions in nearly a year.
- •The monthly Stanbic PMI index links the downturn to declining customer demand, operational disruptions from ongoing protests, and broader economic challenges.
- •Over a third of surveyed businesses reported reduced sales, highlighting the widespread strain.
“In June, the index contracted for a second consecutive month, with the headline index showing weaker overall business conditions. However, the additional PMI indicators show a mixed picture,” Economist Christopher Legilisho noted, “The dip in activity was due to output and new orders contracting because of weaker consumer spending, challenging economic conditions, and social protests reappearing in June.”
Business confidence hit its highest level since May 2024, with 18% of firms optimistic about boosting output in the coming year. Employment also grew for a fifth straight month, suggesting companies are preparing for recovery.
Supply chain conditions improved significantly, with faster delivery times driven by better road conditions and competitive vendor activity. Firms also ramped up stockpiling at the fastest rate since October 2022, pointing to expectations of future demand.
“Price increases reflect concerns about the increased tax burden being faced by businesses,” Legilisho added.
However, cost pressures rose, with input price inflation hitting a six-month high due to increased salary costs. Output prices rose modestly as firms tried to recover costs without losing customers.
With ongoing economic and social instability dampening current performance, Kenya’s private sector appears cautiously optimistic about a rebound in the latter half of 2025.
