Kenya’s private sector has recorded its second consecutive month of contraction, signaling growing pressure on businesses amid a tough economic environment that shows little sign of easing.
The latest Stanbic Bank Purchasing Managers’ Index (PMI) released on Wednesday showed that business activity continued to decline in April, driven by weaker demand, rising input costs, and ongoing cash flow challenges.
What the Numbers Show
The PMI reading dipped below the 50-point threshold that separates expansion from contraction, marking the second straight month of decline. Key indicators including new orders, output, and employment all showed weakness.
Businesses surveyed cited reduced consumer spending power, political uncertainty, and the cumulative impact of new tax measures introduced over the past year as factors weighing on operations.
“Things are tough,” said a Nairobi-based manufacturer. “Orders are down, costs are up, and we are having to make difficult decisions about our workforce.”
Hiring Resilience Amid Slowdown
Despite the overall contraction, the data showed that some firms continued to hire, with employment levels edging up slightly. Analysts say this suggests businesses are holding on to workers in anticipation of a recovery, even as current conditions remain challenging.
sectors actively hiring include financial services, technology, and healthcare, according to a separate report showing that private firms are still recruiting for specialized roles despite the broader slowdown.
Outlook Remains Uncertain
Economists warn that without a significant policy shift — particularly on taxation and energy costs — the private sector may continue to struggle through the second quarter of 2026.
The contraction comes at a time when Kenya is also grappling with fuel supply disruptions and a widening trade deficit, adding to pressure on an economy that grew at a slower pace than projected in 2025.
