NAIROBI, Kenya — Growth in Kenya’s private sector slowed in February as business activity edged closer to stagnation, according to the latest Purchasing Managers’ Index (PMI) released by Stanbic Bank Kenya.
The PMI slipped to 50.4 in February from 51.9 in January, marking the third consecutive monthly decline and signalling only marginal improvement in operating conditions.
A PMI reading above 50.0 indicates an expansion in business activity compared with the previous month, while a figure below that level signals contraction.
Although the February reading remained above the neutral mark for the sixth straight month, analysts said the drop reflects weakening momentum in Kenya’s private sector.
Output Growth Nearly Stalls
The report showed that business output almost stagnated after several months of steady expansion, with the seasonally adjusted index hovering just above neutral.
Around 33pc of surveyed firms reported higher activity, while 32pc recorded a decline, highlighting mixed performance across sectors.
Companies cited slower growth in new orders, weaker consumer purchasing power, and broader macroeconomic pressures as key factors dampening demand.
While overall sales volumes continued to increase, the pace of growth was the weakest recorded during the current six-month expansion cycle.
Some firms said improved sales were driven by new product launches, expanded marketing campaigns, and price promotions, while others reported struggling with difficult economic conditions and intense market competition.
Sector Performance Mixed
The survey revealed uneven performance across sectors of the economy.
Growth was recorded in construction, wholesale and retail trade, and services, while agriculture and manufacturing experienced contractions during the month.
Weaker growth in new business also slowed the pace of purchasing activity, with firms reporting the softest inventory build-up in seven months.
Supplier delivery times continued to improve but at a slower rate, partly due to busy vendors, traffic congestion, and delays at ports, according to survey respondents.
Hiring Continues Despite Slower Growth
Despite softer business conditions, companies maintained hiring as they sought to manage elevated workloads.
Outstanding work levels remained broadly unchanged after eight months of decline, suggesting firms were still dealing with operational backlogs.
To ease pressure, some companies expanded their workforce, sustaining job growth within the private sector.
Cost Pressures Ease
On the cost side, input prices increased at the slowest pace in three months, reflecting softer rises in purchase costs and wages.
However, businesses still pointed to higher material prices and VAT-related costs as contributing factors to operating expenses.
Selling prices also rose at the slowest rate since November, as companies responded to easing cost pressures and challenging market conditions.
Businesses Remain Optimistic
Despite the slowdown, firms remained confident about the outlook for the next 12 months.
More than one-fifth of surveyed businesses expect output to rise, citing anticipated stronger demand, improved economic conditions, product innovation, and expanded marketing efforts.
The level of optimism remained well above the 2025 average, suggesting that companies still see room for recovery despite the recent moderation in growth.
