Stanbic PMI Shows Renewed Growth in Output, Sales, and Jobs Across Kenya

Business conditions began to recover across the Kenyan private sector in September. The Stanbic Bank Kenya PMI® signaled an improvement in business performance for the first time in five months, driven by solid expansions in output, new orders, and employment.

An easing of supply-side pressures, meanwhile, resulted in the greatest shortening of delivery times in four years. The rate of input price inflation slowed in September, but firms signaled a quicker increase in selling charges. The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®).

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. The Kenya PMI rose to 51.9 in September, up from 49.4 in August and above the 50.0 neutral mark for the first time since April.

The index pointed to a fresh upturn in the health of the private sector, after a period impacted by political protests and rising price pressures. Driving the improvement in business conditions was a renewed expansion in activity, which in turn was strongly related to rising sales and a stabilizing economy.

Out of the firms surveyed, roughly a third (33%) noted that their output had grown during September, compared to 23% that recorded a decline. Some businesses reportedly benefited from effective marketing and investment in products and services. That said, some areas experienced weakness, especially in the construction industry, where output fell sharply. On sales intakes, the survey data also signaled a renewed upturn in September.

New business growth was solid, having rebounded after four months of consecutive downturns. This recovery encouraged firms to hire new staff, leading to a rise in employment that was the quickest recorded since May 2023. With staff capacity up, firms managed to deplete their backlogs for the fourth month running.

In contrast, purchasing activity continued to fall in September, with businesses citing that low sales in recent months had weighed on their ability to buy new inputs. Nevertheless, with supply-side pressures easing further after protest-related disruption and vendors willing to deliver items more quickly to gain work, input stocks did increase.

Notably, delivery times improved at the strongest rate in exactly four years. For the second month running, Kenyan businesses reported a softening of input price inflation in September. Though solid, the latest increase in overall costs was the weakest since May.

Where a rise was recorded, firms signaled this was mainly due to higher taxes and rising prices for several items such as fuel and foodstuffs. As cost pressures eased, firms raised their selling prices to a greater extent than the 12-month low seen in August. Inflation was largely linked to higher costs and rising sales. However, the increase was only modest. Finally, Kenyan firms looked towards future activity with sustained confidence. Despite ticking down from August, the 12-month outlook was still one of the best observed in nearly three years. Several firms hope to expand their outlets, diversify product offerings, and ramp up marketing.

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