Kenya PMI Slips Closer To 50.0 Neutral Mark

The Kenyan economy was close to stagnating in February, according to the Kenya PMI®, which fell closer to its neutral 50.0 threshold.

Sales volumes across the private sector rose only marginally, leading firms to put the brake on output growth. The expansion in purchasing activity also eased, supporting a weaker uptick in input prices and, in turn, prices charged. 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 dropped for the third month in a row from 51.9 in January to 50.4 in February, indicating only a marginal improvement in the health of the private sector economy. Notably, the upturn was the slowest recorded in the current six-month growth sequence.

After going on a solid expansionary run over the past few months, output volumes were close to stalling during February, with the respective seasonally adjusted index recording just above its neutral value. Around 33% of surveyed companies posted higher activity, whereas 32% noted a fall, with slowing new order growth and increased pressure from macroeconomic conditions seen as headwinds.

Although total sales volumes rose in February, the rate of growth was relatively subdued and the softest in the current six-month sequence of expansion. Many survey panellists reported that introducing new products and services, expanding marketing and offering price promotions had bolstered sales.

At the same time, other firms commented on difficult economic conditions, low client purchasing power and strong competition. Sector trends were split, with construction, wholesale & retail and services registering sales growth, contrasting with downturns in agriculture and manufacturing. The slowdown in new business growth prompted a smaller increase in purchasing activity over the course of February.

In turn, inventory levels rose at their slowest pace for seven months. While companies continued to benefit from shorter delivery times, the rate of improvement eased from January amid reports of busy vendors, road traffic and port congestion. At the same time, Kenyan companies signalled that workloads were still busy and even struggled to complete backlogs on time.

Outstanding work levels were broadly unchanged after eight consecutive months of depletion. This helped to sustain hiring growth, with firms taking on additional workforces to lower pressure on staff. On prices, the February survey data indicated the slowest increase in overall input costs for three months, as purchase prices and staff wages both rose to lesser degrees. Increases in material prices and the impact of higher VAT were nonetheless cited.

With cost pressures easing and challenging market conditions, Kenyan companies raised their prices at the softest pace since last November. Finally, Kenyan firms stayed confident when assessing the 12-month outlook for business activity in February. Just over a fifth of respondents expect output to rise, citing hopes of stronger demand, better economic conditions, planned product innovation and greater marketing activity. Optimism remained much higher than the average seen in 2025.

Read Also: Kenya’s Private Sector Ends 2025 on a High as PMI Hits Four-Year Peak and Hiring Accelerates