Wholesale/Retail and hospitality workers reported the highest rate of income decline,40% and 45% respectively, among different sectors, according to Q1 ILAM Spending Index.
- •Income trends for workers in the education and training sector was positive in the first quarter of the year, with 46% reporting increased earnings.
- •41% of workers in transport and logistics had same income compared to the previous quarter while 32% reported income increase and another 27% seeing their income decrease during the period under review.
- •Ongoing trade tensions between the US and China are projected to significantly decelerate growth in both economies while pushing inflation higher.
“Q1 2025 saw a shift towards more balanced income changes, with a lower percentage reporting “no change” compared to the previous quarter. Compared to the same time last year, 38% of respondents reported no change in income, while 31% experienced a decrease and another 31% reported an increase,” the survey highlighted.
The education sector had most of its workers spending more during the same period, where 83% of respondents recorded an increase in spending. In contrast, workers in Hotel, Tourism & Leisure reported a decrease in spending at 33 %.
There was an overall decrease in retail business sales in the first quarter of the year, driven by all business sizes and mostly the clothing stores and restaurants and leisure sectors.
Mombasa reported the highest proportion of businesses with improved sales, while Eldoret, Kisumu, and Nyeri recorded lower sales levels. The survey attributes the increase in sales to more customer numbers as well as customers buying more quantities of goods and services. On the other side, the decline in sales was due to seasonality- period of low demand, as well as higher prices of goods.
The index fell by 3% from Q4 2024, attributed to a post-holiday season lull among retail businesses. “Local investments may offer more stability than global markets in 2025,” ICEA LION Asset Management CEO Einstein Kihanda said.
Highlights from the Q2 2025 ILAM Investor Pulse:
● Trade wars slow growth and raise inflation
China’s inflation is expected to rise more than America’s, though it will remain below 1% compared to over 3% in the US. This trend may prompt central banks in developed economies to gradually reduce policy rates, which is in line with the accommodative policy being pursued by the CBK.
● Global markets to see weakest performance in three years
The ripple effects of global volatility are expected to result in the lowest performance of international markets in the last three years.
● Stronger local economic performance
Kenya’s GDP growth is projected to approach or exceed 5%, supported by reduced political volatility and increased private sector credit growth. Inflation though may trend upward towards mid-single digits.
● NSE remains attractive
The Nairobi Securities Exchange (NSE) remains an attractive investment choice because at current levels the NSE offers more value than other African equity markets.
