Kenya’s private sector recorded its strongest improvement in business conditions in more than five years, according to the latest Stanbic Bank Kenya Purchasing Managers Index. The headline PMI rose to 55.0 in November, up from 52.5 in October, marking the highest reading since October 2020 and signalling a solid and broad based expansion across the economy.
The survey findings show a sharp rise in new business, stronger output, faster employment growth and increased purchasing activity, supported by easing inflationary pressures and improving consumer demand.
Strongest New Business Growth Since 2020
Firms reported the fastest increase in sales volumes in more than five years. Respondents attributed this momentum to improved customer purchasing power, successful product launches, and effective marketing campaigns. All five monitored sectors recorded growth in new orders, reflecting a broad based recovery across the private sector.
Selling charges increased only marginally and at the slowest rate since August. Input cost inflation eased to an eighteen month low, with firms citing slower increases in purchase prices and stable wage costs. Many companies highlighted that inflationary pressures have moderated in recent months, providing a favourable demand environment.
Output and Purchasing Activity Strengthen
Business activity expanded at a pace not seen since 2020, driven by stronger market demand and accelerated order inflows. Companies responded by increasing their input purchases significantly, with the rate of growth reaching its highest level in just over five years.
Supplier delivery times improved for a second consecutive month. Firms noted that heightened competition among vendors encouraged faster delivery and better service, supporting efforts to build inventories. Stocks of purchases rose at one of the fastest rates in almost three years, led by the construction sector.
Employment Growth Picks Up
Employment levels increased for the tenth month in a row. The rate of job creation was the second fastest since August 2023, with all monitored sectors adding staff. Firms attributed this trend to improved business conditions and a need to meet rising demand.
Backlogs of work declined for the sixth consecutive month, although the reduction was the slowest since June due to a rise in outstanding work in manufacturing.
Firms Remain Positive but Cautious About the Outlook
Kenyan businesses continued to express optimism about output growth over the next twelve months. However, confidence softened for the third consecutive month since August. Firms expecting output to rise pointed to planned marketing initiatives, expansion strategies and efforts to diversify their product and service ranges.
Commentary from Stanbic Bank
Commenting on the results, Christopher Legilisho, Economist at Standard Bank, stated:
“The Kenya Purchasing Managers Index put on a fair show in November due to steady and improving business conditions in the private sector. The stimulus measures by the authorities over the last twelve months are now showing up in the real economy. Purchasing activity and stocks of inventories strengthened as the effects of more enthusiastic consumer spending impelled firms to ramp up to meet expected demand.
Employment levels ticked up at one of the fastest rates this year due to the improving economic conditions.
Inflation expectations are anchored, as echoed by the survey. Kenyan businesses reported softer increases in input prices, purchase prices and output prices, while wages costs were unchanged. Although, firms still note rising material prices and higher taxation as impacting their margins.
However, the survey notes that confidence in the business outlook over the next twelve months is still subdued.”