Business conditions in Kenya improved in October amid an increase in demand and output levels with employment bouncing back to the expansion territory, the latest Stanbic Purchasing Manager Index (PMI) shows.
- •The index rose to 50.4 in October from 49.7 in September, reflecting a marginal upturn in operating conditions after a sharp decline in September.
- •A PMI reading above 50.0 signals improvement in business conditions while a reading below implies deterioration.
- •Employment levels increased for the first time since July with activity levels expanding amid a broad stabilization of new work propelled by a slight uptick in overall production levels.
“This improvement implies the challenges faced in previous months as now easing, albeit slowly, setting the stage for economic recovery,” Mulalo Madula, Senior Analyst at Standard Bank said in the report.
Inventories saw the biggest uptick in 14 months with Kenyan firms accelerating their purchasing efforts to counter anticipated demand. October saw an increase in sales and increased client interest, driving up overall business activity. Reduced fuel prices watered down the higher tax payments and material costs, reducing the cost burden of most firms. This resulted in mild increases of average prices compared to 2023.
Meanwhile, average prices charged on goods and services increased at a slower pace indicating muted inflationary pressures. Decreases in manufacturing and services sectors countered the expansions in agriculture, construction and wholesale & retail, highlighting the mixed performance across the sectors.
According to the survey, most firms continued to struggle with cash flow constraints, tough economic conditions, rising costs and political uncertainty.
Confidence regarding activity in 2025 rose to a 4-month high, with new outlets, reoriented marketing strategies and greater investment often cited as expected drivers of growth. The future positive sentiment remained at the lowest levels historically mirroring a cautious optimism in Kenya’s business environment outlook in the near term.
