Kenya’s private sector posted its strongest expansion in nearly four years in October, boosted by robust demand, easing inflationary pressures, and improved economic conditions, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI®) survey.
The index rose to 52.5 in October, up from 51.9 in September, marking the second consecutive month of expansion and the highest reading since February 2022. A score above 50.0 indicates an improvement in business conditions, while readings below signal contraction.
The findings, compiled by S&P Global, show that business activity growth surged as new orders and output accelerated sharply, signalling renewed confidence in Kenya’s private sector after a period of disruptions earlier this year.
“Kenya’s private sector in October saw both output and new orders up sharply as conditions improved for consumers and firms benefited from softer inflation,” said Christopher Legilisho, Economist at Standard Bank. “Firms ramped up quantities purchased and increased inventory levels, expecting higher consumer demand.”
The report noted that Kenyan firms benefited from rising sales and broader economic strengthening, encouraging businesses to increase their purchasing activity for the first time since April. The upturn was supported by improved domestic demand, easing price pressures, and steady supply chain conditions.
Sectors monitored by the survey including services, manufacturing, agriculture, and retail recorded broad-based gains in new business. Firms also reported quicker delivery times, citing enhanced efficiency and better vendor competition.
Notably, input cost inflation fell to a 13-month low, with firms attributing the slowdown to subdued import prices and moderated wage growth. The softening of cost pressures enabled companies to expand output and maintain price stability.
While businesses enjoyed relief from high costs, the report showed that optimism about future growth remained muted. Firms were less upbeat about the next 12 months, citing persistent tax burdens and uncertainty about global economic conditions.
“Pricing indicators were soft in October, as input prices, purchase costs, staff costs, and output prices increased only modestly,” Legilisho added. “Low price pressures imply that, while output conditions have improved, they are not fuelling demand-driven inflation.”
According to the survey, both purchase prices and overall wage costs rose at a slower pace than in September, helping to stabilise operating conditions. Firms continued to manage their workforces efficiently, maintaining steady employment levels while reducing backlogs.
Kenyan businesses also reported stable supply chains and improved delivery times, with firms attributing efficiency gains to subdued input demand in recent months and increased vendor competition.
The pace of improvement, however, was slower than September’s four-year high. Still, firms managed to expand inventories as purchasing activity strengthened, reflecting expectations of continued consumer demand through the end of the year.
The PMI report also highlighted that only the wholesale and retail sector showed a notable increase in output prices, as firms offered promotional discounts to attract customers amid competitive market conditions.
Despite the improvement in overall business activity, the pace of job creation remained modest. The report suggested that while demand is strengthening, many firms are prioritising productivity gains and cost management over workforce expansion.
Employment levels were largely unchanged in October, with firms focusing on clearing outstanding orders rather than new hiring.
Nevertheless, around 20% of surveyed firms expected further growth in business activity over the coming year, while most projected a neutral outlook, citing both optimism in domestic markets and caution about external risks.
The Stanbic Bank Kenya PMI® data adds to growing evidence that Kenya’s economy is regaining momentum, following months of uncertainty caused by inflation, protests, and supply disruptions earlier in the year.
The Kenyan shilling has also shown signs of steadiness in recent weeks, while fuel prices and global commodity costs have softened, helping to ease pressure on local producers and consumers.
Although challenges persist; including high taxes, global volatility, and elevated borrowing costs, the continued expansion of business activity signals that Kenya’s private sector is well-positioned to sustain growth into the final quarter of 2025.
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