Kenya’s private sector activity weakened further in May as companies suffered sharp rise in costs during the month, the latest Stanbic Bank Purchasing Managers’ Index shows.
The bank said headline reading declined to 46.6 in May, down from 49.4 in April signalling the quickest decline in the health of the Kenyan private sector since July 2024.
Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.
“The Stanbic Bank PMI data for May reflects a deterioration of business activity by private sector firms. Inventory purchases slowed, from being expansive, because of weakening sales, cash flow concerns, and rising costs. Consumer resistance to spend, alongside rising costs contributed to contractions in new orders and output, said Christopher Legilisho, Economist at Standard Bank.
According to the bank, new sales decreased at the fastest pace since mid-2025 as inflationary pressures led to greater
customer hesitancy as clients tightened budgets midway through the second quarter.
Official data indicate that inflation rate rose to 6.7pc in May from 5.6pc recorded in April due costly fuel which saw transport index rise by 16.5pc.
The sharp increase in petrol and diesel prices which triggered a week-long disruption of business activity further contributed to the decline.
“Inflationary pressures have intensified, constraining demand conditions, with input prices, purchase costs and output prices driven up by higher fuel and transportation costs. Still, despite subdued business momentum, firms remain optimistic about future conditions,” Legilisho added.
Stanbic Bank PMI shows that reduced pressure on capacity via a fall in new orders led firms to cut their workforce numbers for the first time in 16 months midway through the second quarter.
The fall in employment largely regarded temporary staff where contracts were cut short as companies reported sufficient capacity to process.
Construction and services firms recorded downturns in both output and new orders as manufacturing companies recorded growth in production.
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