Key facts
- Kenya's private sector activity contracted for the second consecutive month in June.
- The Stanbic Purchasing Managers' Index (PMI) dropped to 48.6 in June from 49.6 in May.
- Factors contributing to the contraction include declining customer demand, ongoing protests, and economic challenges.
- Over a third of surveyed businesses reported reduced sales.
- Despite the current downturn, business confidence reached its highest level since May 2024.
- Employment continued to grow for the fifth consecutive month.
Kenya's private sector experienced a contraction in business activity for the second consecutive month in June, according to the latest Stanbic Purchasing Managers' Index (PMI). The headline index fell to 48.6 from 49.6 in May, indicating a sharper decline in business conditions.
Economist Christopher Legilisho noted that the downturn was driven by a contraction in output and new orders, attributed to weaker consumer spending, challenging economic conditions, and the reappearance of social protests in June. Over a third of surveyed businesses reported reduced sales, with disruptions impacting operations for up to two weeks.
Despite the subdued current outlook, business confidence reached its highest level since May 2024, with 18% of firms expecting increased output in the coming year. Employment continued to grow for the fifth consecutive month, suggesting companies are preparing for a potential recovery. Supply chain conditions also improved, with faster delivery times and increased stockpiling.
However, cost pressures rose, with input price inflation hitting a six-month high, primarily due to increased salary costs. Businesses also flagged tax hikes, particularly on fuel, as a growing burden influencing pricing decisions.