Private sector expansion fuels fastest job growth in over 2 years

Kenya's private sector expanded at its fastest pace in over five years in November, a closely watched survey showed on Wednesday.

The new development provides a much-needed boost to workers in an economy where job creation has lagged behind growth.

The surge in business activity is now translating directly into the strongest hiring spree in over two years, offering new opportunities amid high unemployment. 

The Stanbic Bank Kenya Purchasing Managers’ Index (PMI), compiled by S&P Global, jumped to 55.0 in November from 52.5 in October, moving further above the 50.0 mark that separates growth from contraction. It was the highest reading since October 2020. 

For workers, the report signals a promising turn. The labour market showed clear signs of strengthening, with employment increasing for the tenth consecutive month.

The pace of job creation accelerated markedly, becoming the second-fastest since August 2023, with gains recorded across all five monitored sectors, including services, construction, and manufacturing. 

Christopher Legilisho, an economist at Standard Bank, said the improving conditions were finally feeding through robustly to the jobs market.

"Employment levels ticked up at one of the fastest rates this year due to the improving economic conditions," he noted. 

The robust expansion was fuelled by a marked improvement in customer purchasing power, linked to a significant moderation in inflationary pressures—another piece of good news for workers' wallets. Input cost inflation slowed to an 18-month low, while output price increases were the weakest in three months, the survey found. 

"Surveyed companies frequently noted that improved purchasing power among customers contributed to higher sales volumes," the report said.

Successful new product launches and marketing campaigns also drove demand, leading to the strongest growth in new business since October 2020. 

In response, companies significantly increased their purchasing activity, with the rate of growth hitting a five-year high. This, coupled with faster supplier delivery times, led to a robust accumulation of input inventories. 

Despite the surge in demand, price pressures remained contained. Where cost increases were reported, firms primarily attributed them to higher tax burdens rather than broad market forces. 

The outlook for  the next 12 months remained positive, though the degree of optimism softened for the third month in a row from a recent high in August. Companies anticipating higher activity cited planned expansions, marketing drives, and efforts to diversify their offerings. 

"The stimulus measures by the authorities over the last 12 months are now showing up in the real economy," Legilisho said, pointing to stronger purchasing activity and inventory building. 

However, he struck a note of caution, adding: "The survey notes that confidence in the business outlook over the next 12 months is still subdued." 

The data suggests Kenya's economy is building momentum heading into the end of 2025, with the private sector rebound now delivering tangible benefits for workers through increased hiring and easing cost-of-living pressures, even as firms watch the horizon for future challenges.