Hope for more jobs as firms in strongest hiring in over 6 years

Companies across most sectors reported taking on more staff to meet rising demand and build capacity for the future. [iStockphoto]

Kenyan businesses expanded their workforce in December at the fastest pace in over six years, according to a private survey released on Tuesday, providing a strong finish to 2025 and fueling optimism for sustained job creation as firms anticipate robust economic growth in 2026.

The Stanbic Bank Kenya Purchasing Managers’ Index (PMI), compiled by S&P Global, remained firmly in expansionary territory at 53.7 in December, down slightly from November’s four-year high of 55.0.

A reading above 50  indicates an improvement in business conditions.

The standout feature was the employment index, which recorded its sharpest rate of growth since November 2019.

Companies across most sectors, with construction a notable leader, reported taking on more staff to meet rising demand and build capacity for the future.

“The Stanbic Bank Kenya PMI stayed in expansion territory, implying still strong demand conditions are driving new orders, in turn lifting output in the private sector at the end of the year,” said Christopher Legilisho, economist at Standard Bank.

“Notably, firms in most sectors highlighted increased employment, especially the construction sector, reflecting efforts by the authorities to stimulate activity.”

A broad-based upturn underpinned the hiring spree. Business output increased at a “sharp rate,” marking the second-quickest growth since late 2020, according to the survey report.

New orders rose for the fourth consecutive month, driven by factors including improved tourism, greater advertising, and competitive pricing. This growth momentum prompted companies to not only hire but also aggressively build stocks.

Purchasing activity increased sharply for a third straight month, “indicating greater efforts to build stocks, secure market positions and capitalise on healthy supply chains,” the report stated.

This inventory building coincided with a significant improvement in supply chain performance, with average lead times decreasing to the greatest extent in over four years.

Business confidence for the new year remained positive and even improved slightly in December. The Future Output Index ticked up to a three-month high.

“Approximately a fifth of surveyed firms were hopeful for an increase in output, with mentions of business diversification plans, new marketing avenues, improved skills bases, product rebrands and investment growth buoying expectations,” the survey detailed.

This optimism extended a trend of robust confidence throughout the second half of 2025 that has been “much stronger than seen earlier in the year and in late-2024.”

The positive data, however, was tempered by a reacceleration of cost pressures. Input price inflation picked up from an 18-month low in November, rising at the quickest rate in four months. The report cited “greater tax burdens for some types of purchases” and higher fuel and materials prices as key drivers.

In response, firms increased their output prices at the fastest pace in five months. Legilisho noted the link to demand: “There was an increase in input prices and output prices linked to higher customer demand in December.”

However, wage inflation remained contained. Staff costs saw only a “fractional increase” in December, with nearly all monitored companies reporting no change. The overall rise in input costs also “remained much softer than the survey’s long-run trend,” offering some relief.

Analysts viewed the data as evidence of firms’ positioning for future expansion. “Overall, the December PMI data indicated robust efforts by Kenyan companies to build capacity, both to meet existing orders and in strong anticipation of future growth,” the survey concluded.

Legilisho echoed this, stating, “Furthermore, firms reportedly increased their input purchases as well as inventories to facilitate faster deliveries and maintain competitiveness in response to improving conditions.”

The strong finish to 2025, characterised by vigorous hiring, rising orders, and solid business confidence, suggests Kenya’s private sector is entering 2026 with significant momentum, offering a hopeful outlook for economic expansion and job creation in the new year, analysts say.