Kenya’s private sector saw slight improvement in business conditions in February, marking its fifth consecutive month of expansion, the latest Stanbic Purchasing Manager Index (PMI) shows.
- •The index rose to 50.6 in February from 50.5 in January, reflecting a marginal upturn in operating conditions, as a PMI reading above 50.0 signals improvement in business conditions.
- •Business activity improved at the quickest since November 2024 with improved economic conditions including lower inflationary pressures boosting demand.
- •New order volumes rose following increased demand attributed to improving cash flows, new product offerings and softer price pressures, boosting demand.
“We reiterate that businesses remain doubtful about future output expectations. Still, lower interest rates may well resuscitate lending among firms and thereby drive economic activity,” Christopher Legilisho, Economist at Standard Bank commented.
Total employment increased marginally with 98% of the firms reporting no change since January as businesses experienced lower backlogs. However, staffing levels elevated halfway into the quarter.
Kenyan firms reported modest increases in output, with notable upturns in agriculture and construction. Expansion of product offerings coupled with efficient marketing efforts pulled new clients and boosted capacity, contributing to a higher output.
Wholesale, retail and services firms recorded declines in activity, new employment and input purchases on the back of increased competition and financial constraints affecting consumers.
Purchasing activity fell for the first time since July 2024 with more firms opting to reduce their input purchases during the month.
Softer rises in input and purchase prices eased overall pricing pressures with staff costs little changed even as some firms increased wages to counter cost of living pressures.
Confidence regarding activity in 2025 got weaker in February, with only 5% of firms expecting activity to rise over the next 12 months, with positivity only recorded in construction, wholesale & retail and services. High competition and concerns about the wider economy also weighed on the sentiment even as the ministry of Finance projected the economy will grow 5.3% in 2025 and 2026, from an estimated 4.6% expansion in 2024.
