Kenya’s private sector returned to growth in September as stronger customer demand, rising new orders and improved cash flows lifted overall business conditions, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI).
The headline Kenya PMI rose to 51.3 in September 2026 from 49.7 in August, moving back above the 50-point mark that separates improvement from deterioration in business conditions.
The September reading represented a modest improvement in Kenya’s private sector and matched July’s performance as the joint-fastest improvement recorded since January. KE_PMI_ENG_2610_PR
However, the report shows that the recovery remains uneven, with businesses continuing to face higher fuel, transport and agricultural input costs as well as shortages of some materials.
New orders rise for fourth straight month
According to the Stanbic Bank Kenya PMI report, new business increased for the fourth consecutive month in September.
Businesses attributed the improvement to stronger market demand, customer referrals, marketing campaigns and additional cash injections.
Despite stronger sales, overall business activity remained slightly below the neutral mark, meaning output contracted for the seventh consecutive month.
The contraction was, however, the weakest recorded during the seven-month period.
Agriculture and the wholesale and retail sectors recorded lower activity, while manufacturing, construction and services expanded during September. KE_PMI_ENG_2610
Stanbic Bank Economist Christopher Legilisho said the latest numbers point to an improvement driven mainly by demand rather than a broad recovery across the economy.
“The rise in Stanbic Kenya’s headline PMI in September points to a demand-led improvement in private sector conditions rather than a broad-based recovery in activity.”
He noted that stronger demand and improved cash flows supported new orders, although businesses continued to struggle with higher fuel, transport and agricultural input costs. KE_PMI_ENG_2610
Kenyan companies continue hiring
Employment also increased in September, marking the fourth consecutive month of job growth.
Companies said they were recruiting additional workers because of growing workloads and an increase in new business.
Although the pace of hiring slowed slightly compared with August, it remained stronger than the survey’s historical average.
At the same time, businesses reported an increase in unfinished work, suggesting that some companies were struggling to keep up with rising demand.
About 31% of businesses surveyed expect activity to increase over the next 12 months, with companies planning investments in technology, expanded capacity, marketing and new products and services. KE_PMI_ENG_2610
Fuel and transport costs push business expenses higher
Inflation remained one of the biggest challenges facing Kenyan businesses in September.
Around 30% of companies surveyed reported an increase in total input costs, while just 1% said their costs had fallen.
Businesses mainly blamed higher fuel, transport and agricultural product prices.
Wage costs also increased as companies reported salary adjustments linked to cost-of-living pressures.
The increase in operating expenses prompted more businesses to transfer costs to customers.
According to the report, one in five companies increased their selling prices in September, while only 2% reduced prices.
The rate at which businesses increased their prices was the second-fastest since November 2023, surpassed only by the increase recorded in June 2026. KE_PMI_ENG_2610
Legilisho said this suggested companies were increasingly passing higher costs to consumers.
Businesses increase purchases and inventories
Kenyan companies also increased their purchasing activity in September, ending a four-month period of decline.
The improvement was linked to stronger operational requirements as new orders increased.
Companies also increased their stocks of raw materials and other inputs, with inventories rising at their fastest rate since June 2025.
Some businesses said they were stocking up because of expectations of stronger demand and concerns about potential supply shortages.
Supplier delivery times improved for the second consecutive month, although shortages of some materials continued to cause delays. KE_PMI_ENG_2610
Kenya economic outlook remains cautiously positive
Despite the improvement in the Kenya PMI, businesses remain cautious about the months ahead.
Business expectations fell to a four-month low in September, although optimism remained among the strongest recorded in more than five years.
Stanbic Bank said sustained economic expansion would depend partly on easing inflationary pressures and improved availability of inputs.
Legilisho said demand momentum remained supportive of business activity, but warned that persistent cost pressures could limit growth.
The September PMI was compiled by S&P Global using responses from purchasing managers at around 400 Kenyan private-sector companies covering agriculture, mining, manufacturing, construction, wholesale, retail and services.
