Kenya’s private sector economy remained under pressure in April 2026 as rising fuel costs, weaker customer demand and broader economic uncertainty continued to weigh on business activity, according to the latest Stanbic Bank Kenya PMI® report.
The headline Purchasing Managers’ Index™ rose to 49.4 in April from 47.7 in March, signalling a slower rate of deterioration but remaining below the 50.0 neutral mark for the second consecutive month. A reading above 50.0 indicates an improvement in business conditions, while a reading below 50.0 signals a decline.
The April data showed that both output and new orders contracted for the second month running, although the pace of decline eased compared with March. Businesses linked the drop in sales to reduced customer spending, with higher prices—largely driven by fuel costs related to the conflict in the Middle East—dampening demand.
Fuel Prices Push Input Costs to Fastest Rise Since December 2023
One of the strongest signals from the April PMI report was the sharp increase in business costs. Input price inflation accelerated to its highest level since December 2023, with about 18% of surveyed firms reporting a month-on-month rise in expenses. Companies cited higher fuel prices, delivery charges, material shortages and increased shipping costs as key drivers.
The rise in costs was also passed on to customers. Output prices increased at the fastest pace in nearly two-and-a-half years, as businesses adjusted selling prices to protect margins after absorbing some cost pressures in March.
Output and New Orders Contract Again
Kenyan companies reported a second consecutive monthly fall in output in April, though the contraction was described as modest compared with March. The decline was led by firms in wholesale and retail trade, agriculture and services, where economic instability and higher operating costs constrained activity.
New orders also fell again, but at a much softer pace than in March. While many businesses reported subdued demand due to rising prices, some firms recorded stronger sales supported by marketing initiatives, product innovation and business expansion efforts.
Businesses Build Stocks Amid Supply Concerns
Despite softer demand, purchasing activity continued to grow in April, extending the current expansion sequence to seven months. However, the pace of growth slowed to the weakest in that period.
Inventories also rose after falling in March, with businesses increasing input stocks in anticipation of further price increases and possible shortages. The report noted that stock building returned as firms sought to protect themselves from supply disruptions and higher future costs.
Employment Remains Resilient
Employment conditions remained positive in April, with Kenyan firms increasing staff numbers for the fifteenth consecutive month. The pace of job creation improved slightly from March and was close to the survey’s long-run average. Many companies reported hiring casual workers to support ongoing projects and expansion plans.
Backlogs of work, meanwhile, declined only fractionally, a significant improvement from March’s near six-year record contraction. The report said 93% of firms recorded no change in outstanding work during the month.
Business Confidence Softens but Remains Positive
Business confidence declined for the third month in a row, reflecting concerns over higher costs, softer demand and supply risks. However, sentiment remained positive overall, with around 18% of surveyed businesses expecting output to increase over the next 12 months. Firms cited expansion plans, product diversification, marketing investment and capacity building as reasons for optimism.
Commenting on the findings, Christopher Legilisho, Economist at Standard Bank, said the April PMI showed a second month of contraction as firms remained concerned about the impact of the Middle East conflict on domestic activity. He noted that rising transport costs and supply concerns weighed on output and new orders across sectors such as wholesale and retail trade, agriculture and services.
Outlook for Kenya’s Private Sector
The April 2026 Stanbic Bank Kenya PMI points to a private sector that is still under strain but showing signs of stabilisation compared with March. The improvement in the headline index suggests that the downturn moderated, but persistent fuel-driven inflation, weaker customer demand and uncertainty around supply chains remain key risks for Kenyan businesses.
At the same time, continued hiring, stock building and positive business expectations indicate that firms are preparing for future demand while managing short-term cost and supply pressures.
