Kenya’s private sector recorded its fastest pace of growth in ten months in March, driven by a solid rise in new business and a notable increase in output, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI®).
The headline PMI climbed from 50.6 in February to 51.7 in March, indicating a stronger improvement in business conditions and surpassing the series average of 51.2. This is the highest reading since May 2024.
According to the survey, firms reported a sharper increase in new business inflows, the quickest since January 2023, supported by improved weather, targeted marketing, and growing customer bases. However, inflationary pressures and limited consumer liquidity continued to constrain some sectors.
“The March Kenya PMI shows a private sector with faster growth in output and new orders, assisted by increased customers, good weather, and sustained marketing,” said Christopher Legilisho, Economist at Standard Bank. “Still, there were robust expansions in sectors such as services, wholesale and retail, though manufacturing continued to lag.”
Manufacturing was the only sector to experience a decline, reporting fresh contractions in both production and new orders.
The uptick in demand encouraged firms to step up input purchases, which rose at the fastest rate in two-and-a-half years, leading to a modest accumulation of input stocks. However, hiring activity remained subdued, with only a slight rise in staffing levels, as businesses indicated limited capacity pressures.
Price pressures showed signs of easing, with March recording the softest increase in selling charges in five months. Input prices rose modestly, partly due to higher costs in agriculture and construction, while manufacturing input costs actually declined.
“Pricing pressures were at their softest in five months due to restrained increases in input and purchase prices. Staff costs rose only slightly,” Legilisho added.
Despite the positive data, the report highlighted subdued business sentiment, with the lowest level of confidence in future output since the series began. Some firms expressed optimism based on plans to open new branches or diversify offerings, but overall, uncertainty persists.
The Stanbic Bank Kenya PMI is compiled by S&P Global and is based on responses from approximately 400 private sector companies, covering agriculture, mining, manufacturing, construction, wholesale, retail and services. A PMI reading above 50.0 indicates an improvement in business conditions, while below 50.0 signals a deterioration.
