Kenya’s private sector economy showed renewed signs of recovery in September, with business activity expanding for the first time since April, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI®). The index rose to 51.9, up from 49.0 in August, signaling the strongest improvement in delivery times in four years and renewed optimism among firms.
A reading above 50.0 indicates growth in business activity, while anything below suggests contraction. September’s rebound was driven by stronger sales, easing inflationary pressures, and an uptick in employment, offering hope that the private sector could be entering a more sustained period of stability.
Business conditions improved as companies recorded stronger sales growth, leading to higher demand and new orders. The increase in activity spurred hiring, with firms expanding staff numbers at the fastest pace in five months. This rise in employment was largely tied to improved business sentiment and efforts to meet demand recovery.
The report noted that the private sector benefited from a “renewed increase in new business inflows,” supported by easing cost pressures. This, in turn, contributed to the fastest improvement in supplier delivery times since 2021, easing operational bottlenecks that had plagued businesses in recent years.
Christopher Legilisho, Economist at Stanbic Bank, said the results signalled a possible turning point for Kenya’s private sector after months of weak performance.
“Business conditions expanded in September, implying the start of a recovery after the significant downturn registered in Q2 2025. New orders and output strengthened due to relaxed cost pressures, while delivery times improved to the greatest extent in four years,” he said.
Despite the optimism, many firms still reported higher input costs, largely tied to rising prices for essentials such as fuel and foodstuffs. The report highlighted that while input cost inflation softened compared to August, prices remained historically high.
Consumer price inflation also slowed, falling to a 12-month low in September, giving businesses and households some relief. However, most companies continued to struggle with weaker purchasing power among clients, limiting stronger recovery momentum.
For the second consecutive month, firms reported an increase in selling charges, reflecting attempts to pass on higher costs to customers. Yet, overall output prices rose at the slowest pace since May, showing that businesses were cautious not to choke off demand.
Kenyan companies remain largely upbeat about the future, with expectations for output over the next 12 months reaching one of the highest levels in nearly three years. Firms are hopeful that easing inflation, recovering demand, and policy stability will sustain the rebound in private sector growth.
Sectors such as services, manufacturing, and construction showed the strongest gains, driven by renewed investment and a steady flow of orders. However, agriculture continued to face challenges due to erratic weather conditions, which kept food prices elevated.
“Encouragingly, business prospects for the upcoming year are still strong,” Legilisho noted. “While private sector conditions have been improving, most businesses continue to view the operating environment as challenging.”
The improvement in the PMI comes at a time when Kenya is battling high public debt, currency volatility, and pressure on household incomes. Analysts suggest that the stronger PMI reading provides some optimism that the private sector could help underpin the country’s broader economic stability in the coming months.
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