Kenya's employment growth quickened in February compared to January, even as broader private sector momentum eased, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index compiled by S&P Global on behalf of Stanbic Bank Kenya.
- •While the index remained above the 50.0 neutral mark that separates expansion from contraction, the latest reading of 50.4 represents the slowest pace of growth in the current six-month expansion sequence.
- •Data from the Kenya National Bureau of Statistics show annual consumer price inflation eased to 4.3% in February 2026, down from 4.4% in January.
- •The PMI survey showed input cost inflation slowed to a three-month low, with purchase prices and staff costs rising at more moderate rates.
“The Stanbic Kenya PMI cooled in February as firms reported only modest surges in new orders and steady output. While the outcome was still expansionary, some businesses were hampered by increased competition and a doubtful economy,” Christopher Legilisho, economist at Standard Bank, said.
Output volumes were close to stalling during the month, with around one-third of firms reporting higher output, and a similar share indicating decline. New orders increased, but at the weakest rate in six months.
Businesses that recorded gains attributed them to new products, expanded marketing and promotional pricing. Others cited constrained consumer purchasing power, difficult economic conditions and heightened competition.
Construction, wholesale and retail, and services registered sales growth, while agriculture and manufacturing recorded downturns.
Although overall inflation remains within the Central Bank’s target band, price pressures remain concentrated in essential household items. Food and non-alcoholic beverages inflation stood at 7.3% year-on-year, the largest contributor to headline inflation, accounting for 2.15 percentage points of the 4.3% overall rate. Prices of staples such as cabbage (up 43.4% year-on-year), kale (25.9%), potatoes (18.3%) and maize grain (15.2%) remained elevated.
By contrast, energy-related costs offered some relief in February. Petrol prices fell 2.3% month-on-month to KSh 179.35 per litre, while diesel declined by the same margin to KSh 167.72. Electricity costs for 50 kWh and 200 kWh consumption bands dropped by 2.9% and 2.7% respectively.
Core inflation which excludes volatile food and energy items eased to 2.1% in February from 2.2% in January. Non-core inflation, however, remained elevated at 10.1%.
Backlogs of work were broadly unchanged in February, ending an eight-month stretch of depletion. Firms said incoming orders remained challenging to complete, particularly in manufacturing and services, supporting continued workforce expansion.
Purchasing activity rose for a fifth consecutive month, though the pace of growth eased to its slowest since October. Inventory accumulation also moderated, with firms limiting stock build-up amid softer demand.
Supplier delivery times improved further, albeit at a slower pace, as reports of busy vendors, road congestion and port bottlenecks tempered gains. Higher VAT and material costs were still cited, though improved input availability helped contain increases.
Output price inflation also eased to a three-month low, as firms passed on costs more cautiously in a competitive market. Some businesses offered discounts to stimulate sales, reflecting the tension between margin preservation and weak demand.
