The Stanbic Kenya Purchasing Managers’ Index (PMI) fell from 52.0 in April to 49.6 in May, dipping below the 50.0 no-change threshold for the first time since September 2024.
This marks a modest deterioration in private sector health following sustained growth.
Christopher Legilisho, economist at Standard Bank, says, “Consumers remain hesitant to spend due to concerns about their economic state and the dim outlook. Still, whereas output, new orders, and purchasing activity declined, employment and inventories rose, while backlogs remained steady.”
Output and New Orders
During the period, total business output contracted at the fastest rate in ten months, with 33% of firms reporting declines, mainly in the construction, wholesale retail, and services sectors.
Conversely, the agriculture and manufacturing sectors saw output growth. New orders fell for the first time since September 2024, reflecting weaker customer demand amid rising prices and challenging economic conditions.
Input Prices and Output Charges
Input price pressures accelerated to their highest level in four months, driven by increased purchase prices and higher taxation. Despite this, firms moderated output price increases, which rose at the slowest pace in seven months, as businesses sought to shield customers from steep price hikes.
Employment and Inventories
Employment continued to grow modestly for the fourth consecutive month, supported by short-term hiring to complete existing orders.
Inventories expanded for the fifth month running, though purchasing activity slowed to its weakest rate since February 2025. Backlogs of work remained stable, indicating no significant operational bottlenecks.
As a result, confidence remained subdued, with business expectations for the next 12 months ticking down to their second-lowest level on record.
Only 4% of surveyed firms anticipate output improvements, citing plans for branch openings and new marketing strategies.
