NAIROBI, Kenya- Kenya’s private sector activity contracted in August for the first time in three months, as supply constraints and rising costs prompted companies to reduce output and purchases, a survey showed on Thursday.
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 49.7 in August, from 51.3 in July. A reading above 50 indicates an improvement in business conditions, while a reading below 50 signals contraction.
The survey found that companies faced higher raw-material costs and tight cash flows, limiting their ability to respond to stronger demand by increasing production.
Stanbic Bank economist Christopher Legilisho said high raw-material costs and constrained cash flows affected firms’ ability to translate demand into higher output.
The contraction came after private-sector activity recorded an improvement in July, when the PMI rose to 51.3 from 50.0 in June.
At the time, Stanbic said stronger new orders and modest hiring had supported the improvement, although elevated inflation, input costs and tight cash flows continued to constrain production.
Kenya’s annual inflation rate also increased slightly in August, rising to 6.6% from 6.5% in July, according to the country’s statistics office.
The latest PMI reading covers companies across Kenya’s private sector and provides an indication of business conditions based on factors including output, new orders, employment, purchasing activity and prices.
The Ministry of Finance is forecasting economic growth of 5.0% in 2026, followed by 5.1% in 2027 and 5.2% in 2028.
The August PMI figures were released on Thursday, September 3, 2026.
