Kenya’s private sector closed 2025 with solid growth momentum, underpinned by rising customer demand, robust business activity and the strongest employment expansion in over six years. This is according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI) compiled by S&P Global.
The headline PMI rose to 53.7 in December 2025, firmly above the 50.0 threshold that separates expansion from contraction.
Together with November’s reading of 55.0, the December figure marks the highest PMI levels recorded in four years, signalling a sustained improvement in non-oil private sector business conditions as the year drew to a close.
Demand-led growth boosts output and sales
Business activity expanded at a sharp pace in December, supported by a continued rise in new orders. While slightly softer than November’s five-year high, output growth remained historically elevated.
Firms widely attributed the upturn to increased order book volumes, reflecting resilient domestic demand and improved operating conditions.
Sales volumes rose for the fourth consecutive month, with businesses citing stronger tourism activity, enhanced advertising, improved cash flows and competitive pricing strategies.
Most sectors recorded growth, although wholesale and retail trade registered a marginal decline.
Employment surges to six-year high
In response to rising workloads and optimistic growth expectations, Kenyan firms expanded their workforce at the fastest rate since November 2019.
Job creation was broad-based across sectors, with the construction industry recording particularly strong hiring, reflecting ongoing public and private sector efforts to stimulate economic activity.
The increase in staffing capacity helped companies further reduce outstanding work. Backlogs of work declined for the seventh consecutive month, marking the longest stretch of reduction in more than a decade.
Purchasing activity and supply chains strengthen
Firms also stepped up purchasing activity, recording a third consecutive month of growth in input buying. The pace of expansion was the second-fastest in over five years, as companies sought to build inventories, secure market positions and respond to higher demand.
Supply chain performance improved markedly, with average supplier delivery times shortening to the greatest extent in more than four years. Businesses attributed the improvement to better availability of inputs and heightened competition among suppliers.
Inflationary pressures re-emerge but remain contained
Input costs rose at a faster pace in December, rebounding from an 18-month low recorded in November. Survey respondents pointed to higher taxes, fuel prices and material costs as key drivers. Despite the acceleration, overall cost pressures remained below the survey’s long-run average.
Selling prices also increased, reaching their fastest pace since July, particularly in manufacturing, services and construction. Wage inflation, however, remained muted, with most firms reporting no change in staff costs.
Business confidence strengthens heading into 2026
Looking ahead, business sentiment improved further, with the Future Output Index climbing to a three-month high. Firms expressed confidence that output would grow in 2026, supported by planned investments, diversification strategies, product rebranding, increased marketing efforts and continued hiring.
Commenting on the findings, Christopher Legilisho, Economist at Standard Bank, said the PMI data point to strong underlying demand conditions driving private sector growth at year-end.
“Firms in most sectors highlighted increased employment, especially in construction, reflecting efforts by the authorities to stimulate activity,” Legilisho noted. “At the same time, rising input and output prices linked to stronger demand suggest that inflationary pressures could pick up in the coming months as business confidence improves.”
Overall, the December PMI survey paints a picture of a private sector entering 2026 on a firm footing, with resilient demand, expanding capacity and improving supply chains providing a strong platform for continued economic growth.
