Kenya PMI Reaches Its Highest Level In Over Five Years

The Kenya PMI® pointed to a strengthening of growth in the private sector economy in November, as business activity and new work both expanded at the sharpest rates in over five years.

Firms experienced improved customer sales, helped by relatively soft inflationary pressures, as well as successful new product launches and marketing campaigns. Purchases of inputs rose, while employment growth quickened from October.

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. At 55.0 in November, the headline PMI was up strongly from 52.5 in October and at its highest since October 2020.

The upturn was mainly driven by a much sharper increase in sales volumes compared to the previous survey period. Surveyed companies frequently noted that improved purchasing power among customers contributed to higher sales volumes. This trend was partly linked to a moderation in inflationary pressures, as evidenced by the survey data. In fact, selling charges increased only slightly and at the slowest rate since August, while input costs rose to the smallest extent in 18 months.

Panellists also highlighted the effectiveness of new marketing initiatives, increased customer referrals, and rising demand for innovative products. Notably, sales growth was broad-based in November, with all five monitored sectors reporting an increase compared to the previous month. Business activity expanded at a sharper rate over the course of November. The pace of growth was the fastest seen in just over five years.

Likewise, firms increased their purchases of inputs greatly in November in an effort to meet client demand and shore up inventories. Supplier delivery times improved during November. Qualitative feedback indicated that increased competition among vendors had driven faster deliveries as they sought to strengthen business relationships. Coupled with the marked rise in purchases, this contributed to a robust expansion of input inventories during the latest survey period.

Although input demand rose, firms signalled there was little impact on purchase prices. Where an increase in costs was observed, comments mainly linked this to higher tax burdens. The labour market showed signs of strengthening in November amid rising demand. Employment increased for the tenth consecutive month, with the latest growth being the second fastest since August 2023.

Looking ahead to the next 12 months, Kenyan companies maintained a generally positive outlook for private sector output. However, this optimism softened for the third consecutive month since August’s recent high. Firms anticipating increased activity primarily cited planned marketing campaigns, business expansion initiatives, and efforts to diversify their product and service offerings.

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