Kenya’s private sector returned to growth in September after a contraction in August, as stronger customer demand and an increase in new orders improved business conditions.
The Stanbic Bank Purchasing Managers’ Index (PMI) rose to 51.3 in September from 49.7 in August. A reading above 50 signals an improvement in private sector business activity, while a reading below 50 indicates contraction.
The latest figures point to a modest recovery, with new orders increasing for the fourth consecutive month as businesses recorded stronger demand from customers.
Firms also stepped up purchasing during the month and increased their inventories in response to improving demand.
Employment continued to expand, indicating that businesses maintained their efforts to increase staffing levels despite ongoing cost pressures.
However, production remained under pressure, with output declining for the seventh month in a row. The contraction was the weakest recorded during the seven-month period.
Businesses attributed the continued decline in output to high operating costs, particularly fuel, transport and agricultural input prices. Some firms also reported shortages of materials that affected their ability to maintain production.
Stanbic Bank economist Christopher Legilisho said the durability of the recovery would depend largely on whether businesses can overcome the cost pressures affecting production.
He noted that while demand and new orders are showing signs of sustained improvement, rising input costs and limited availability of materials continue to constrain businesses.
The September figures therefore point to a private sector gradually regaining momentum, although elevated operating costs remain a key challenge to a stronger recovery.
