The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) climbed to 51.3 in September, up from 49.7 in August, moving back above the 50.0 threshold that signals expansion and reaching its highest level since January, according to the S&P Global-compiled survey released on October 5.
Output continued to contract for a seventh month, but stronger demand lifted the index; new orders grew for the fourth consecutive month, with firms attributing the rise to market demand, customer referrals, marketing campaigns and cash injections.
Employment rose again, albeit at a slightly slower pace than before, and remained above the survey’s average; outstanding work increased for a fourth month as firms linked hiring to higher workloads.
Purchasing activity improved after four months of decline and input inventories rose for the first time since June, while suppliers delivered faster for a second month, though material shortages limited the improvement.
The Output Index stayed just under 50.0, its highest reading in seven months, as agriculture and wholesale-retail activity fell while manufacturing, construction and services expanded; firms blamed inflation and shortages of agricultural goods for the weaker output.
Christopher Legilisho, economist at Stanbic Bank, said the result reflected a “demand-led improvement in private sector conditions rather than a broad-based recovery in activity” and added that “manufacturing, construction and services expanded, while agriculture, wholesale and retail remained under pressure.”
About 30 per cent of respondents reported higher total input costs in September, compared with 1 per cent who saw a decline; fuel, transport and agricultural products were the main cost drivers, and one in five firms raised selling prices while 2 per cent cut them, making output-price inflation the second-fastest since November 2023.
Official data showed annual inflation rising to 6.8 per cent in September from 6.6 per cent in August, with food inflation at 9.5 per cent, transport inflation at 15.6 per cent and core inflation climbing to 4 per cent, marking the sixth consecutive month above the central bank’s 5 per cent midpoint.
The PMI has crossed the 50.0 line four times since January, after peaking at 55.0 in November 2025, falling to 51.9 in January, then moving through readings of 50.4 in February, 47.7 in March, 49.4 in April, 46.6 in May, 50.0 in June, 51.3 in July, 49.7 in August and back to 51.3 in September.
Fuel prices remained elevated, with pump prices for petrol at KSh178.28 and diesel at KSh166.54 in the March-April period, and ceilings for September-October set at KSh214.03 for petrol and KSh217.86 for diesel; the Treasury extended a VAT cut on petroleum products to 8 per cent from 16 per cent for three months through mid-October.
Business confidence slipped to a four-month low, with roughly 31 per cent of firms expecting higher activity over the next year and the remainder seeing no change; Legilisho warned that sustained expansion would require lower cost pressures and improved input availability.
