Private sector activity registers sluggish growth in February

Kenya's private sector activity expanded more slowly in February, weighed down by agriculture and manufacturing.

Despite the slower expansion, a new survey shows that Kenyan firms continued hiring, which has been on the rise since February last year and registered the strongest growth in February this year. 

The Stanbic Bank’s Purchasing Managers Index (PMI) released on Wednesday showed that despite firms reporting improved conditions, there are sectors that have been slow to report the benefits and are still experiencing. 

The PMI dropped for the third month in a row to 50.4 in February from 51.9 in January and 53.7 in December.

PMI measures the prevailing direction of economic trends in different sectors with readings above 50.0 signalling an improvement in business conditions from the previous month, while readings below 50.0 show a deterioration.

The survey noted February’s reading indicated “only a marginal improvement in the health of the private sector economy”.

“Notably, the upturn was the slowest recorded in the current six-month growth sequence,” said PMI.

“Sector trends were split, with construction, wholesale and retail, and services registering sales growth, contrasting with downturns in agriculture and manufacturing.”

The survey also showed a growth in job numbers, which has registered growth over the last year, attributed to an increase in workloads and new project starts. This, according to the survey, signalled underlying improvement in the private sector.

“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,” said PMI.

‌Stanbic ⁠Bank Economist Christopher Legilisho said the PMI cooled in February as firms reported only modest surges in new orders and steady output. 

“While the outcome was still expansionary, some businesses were hampered by increased competition and a doubtful economy. Although macroeconomic conditions have improved, the broader economy has not yet seen the benefits; sections of the private sector are still feeling the strain,”  he said, adding that business confidence among executives remained steady, with about a fifth of firms in the survey remaining optimistic about future output. 

“Additionally, purchasing demand was resilient as both quantities purchased and inventories increased, though at a slower pace. Input prices and purchase costs increased in February, driven by higher operating costs and tax concerns, though the improved supply of inputs helped contain price increases. Output prices were up only slightly as discounts and increased competition restrained momentum.”