Kenya’s private sector economy slowed sharply in February as the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 50.4, down from 51.9 in January.
This marked the third consecutive monthly decline and the weakest upturn in the current six‑month growth streak.
The February reading hovered just above the neutral 50.0 threshold, signaling only a slight improvement in business conditions. Output volumes nearly stalled, with 33% of surveyed firms reporting higher activity and 32% noting declines. Sluggish new orders and macroeconomic pressures weighed heavily on performance.
Employment Growth Accelerates
Despite softer demand, employment numbers rose in February, continuing a trend that began in February 2025. The pace of job creation accelerated compared to January and surpassed the period’s average, driven by heavier workloads and new project launches.
“Job numbers rose at Kenyan businesses, continuing the run of job creation that began in February 2025. Furthermore, the pace of growth accelerated from January and was stronger than the average seen in the aforementioned period,” the report noted.
Backlogs of unfinished work remained broadly unchanged after eight months of decline, with manufacturing, wholesale & retail, and services reporting more outstanding orders. Construction and agriculture, however, saw lighter workloads.
Sales Growth Softens
Total sales volumes rose only marginally, marking the weakest growth in six months. Firms credited new products, marketing campaigns, and price promotions for boosting sales. Others cited weak consumer purchasing power, strong competition, and difficult economic conditions.
Sector trends diverged: construction, wholesale & retail, and services recorded modest gains, while agriculture and manufacturing contracted.
Purchasing and Inventories Ease
Slower new business growth prompted smaller increases in purchasing activity. Inventory levels rose at their slowest pace in seven months. Delivery times improved, but at a slower rate than January due to busy suppliers, road traffic, and port congestion.
Input Costs and Pricing Trends
Input costs rose at the slowest pace in three months. Purchase prices and wages increased modestly, with higher VAT and material costs cited as drivers. With cost pressures easing, firms raised output prices at the softest pace since November 2025, restrained by discounts and competition.
Business Outlook
Confidence remained resilient. Just over 20% of firms expect output to rise over the next 12 months, citing hopes of stronger demand, improved economic conditions, product innovation, and greater marketing activity. Optimism was notably higher than the 2025 average.
Economist’s Comment
Christopher Legilisho, Economist at Standard Bank, observed: “The Stanbic Kenya PMI cooled in February as firms reported only modest surges in new orders and steady output. While expansion continued, businesses faced increased competition and a doubtful economy. Expectations for the year ahead held steady, with job growth momentum sustained and purchasing demand resilient, though slower.”
The February PMI underscores a private sector under pressure, balancing modest growth with rising competition and subdued demand. Yet, the acceleration in job creation signals underlying resilience. Firms remain cautiously optimistic, pointing to innovation, marketing, and stronger demand as drivers of recovery in the months ahead.
