Kenya’s private sector experienced its most significant downturn in a year this July, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI). The index, which measures business conditions, dropped to 46.8 from 48.6 in June, marking the third consecutive month of decline and the sharpest deterioration since July 2024. A reading below 50.0 indicates a decline in business conditions.
The downturn was primarily driven by weaker new orders and rising inflationary pressures, which were exacerbated by recent political protests. Business activity saw its fastest decline in a year, with 38% of surveyed businesses reporting a decrease. This contraction was most severe in the manufacturing and services sectors.
Key Findings from the Report
- Weakening Demand: New orders fell at their sharpest rate in 12 months, with businesses citing reduced customer spending power, higher prices, and decreased footfall due to protests.
- Accelerating Inflation: Input costs rose at the fastest rate in seven months, driven by steep increases in fuel prices and new taxes. This led firms to increase their selling prices to the greatest degree since January.
- Stable Employment: Despite the decline in output, staffing levels remained largely stable. This helped businesses clear their backlog of work, which fell at the quickest pace in over four years.
- Mixed Sector Performance: While manufacturing and services struggled, the agriculture, construction, and wholesale & retail sectors reported an increase in output.
- Future Optimism: Despite the current challenges, business confidence for future activity rose for the second month in a row, reaching its highest level in 15 months. This optimism is linked to planned new product launches, land purchases, and business expansions.
Christopher Legilisho, an economist at Standard Bank, commented that the PMI data reflects the negative impact of recent protests and harsh economic conditions on consumer spending. However, he noted that the stable employment and rising business confidence suggest that firms are hopeful for an improved state in the coming year.
Read the full Stanbic Bank Kenya Purchasing Managers’ Index (PMI) Report, July 2025 HERE.