Kenya’s private sector economy showed strong signs of recovery in September, registering its first improvement since April, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index survey (PMI survey).
The headline PMI figure rose sharply to 51.9 in September, up from 49.4 in August, moving above the neutral 50.0 threshold. This upturn follows a challenging period marked by political disruptions and intense price pressures earlier in the year.
Key highlights of the report are:
- Business activity and new sales both expanded for the first time in five months, signaling a stabilization of the economy and improving consumer deman
- The recovery encouraged firms to hire new staff, resulting in the quickest rise in employment since May 2023.
- Delivery times for inputs improved at the strongest rate in four years, indicating an easing of supply-side pressures following earlier protest-related disruptions.
- The rate of input price inflation slowed for the second consecutive month, though firms still faced higher costs related to taxes and fuel.
The return to growth was primarily driven by a renewed expansion in output and new orders. Roughly a third (33%) of surveyed firms reported output growth in September, compared to 23% recording a decline. This new business growth reversed four consecutive months of downturns.
However, the recovery was not universal. Purchasing activity continued to fall, as many businesses remained cautious due to low sales in recent months. The construction industry, in particular, saw a sharp fall in output.
While the rate of overall input cost inflation moderated to its weakest level since May, firms reported persistent concerns about higher taxes and rising commodity prices (such as fuel and foodstuff). Despite this easing of costs, businesses increased their selling prices at a slightly quicker, though modest, pace compared to August.
Looking ahead, Kenyan firms maintained sustained confidence regarding future activity. Though slightly down from August, the 12-month outlook remains one of the best observed in nearly three years, with firms planning expansions, product diversification, and increased marketing.
Christopher Legilisho, Economist at Standard Bank, commented:
“Business conditions expanded in September, implying the start of a recovery after the disruptions that followed protests in Q2:25. New orders and output strengthened as consumer demand improved, despite some firms reporting caution from clients due to still challenging economic conditions. Encouragingly, business prospects for the upcoming year were still strong, albeit far off from historical trends—this implies that, while conditions for some firms have been improving, most still experience the business environment as challenging.”