Kenya’s private sector shows recovery in September with PMI at 51.9

Investing.com -- Kenya’s private sector economy showed signs of recovery in September, with the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) rising to 51.9 from 49.4 in August.

This marks the first time the index has moved above the 50.0 neutral mark since April, signaling an improvement in business conditions after months affected by political protests and rising prices.

The recovery was driven by solid expansions in output, new orders, and employment. Approximately 33% of surveyed firms reported growth in output during September, compared to 23% that experienced decline.

Many businesses benefited from effective marketing and investment in products and services, though the construction industry continued to face sharp output declines.

Employment rose at the quickest pace since May 2023 as businesses responded to renewed sales growth. With increased staff capacity, companies were able to reduce their backlogs for the fourth consecutive month.

Supply chain performance improved significantly, with delivery times shortening at the strongest rate in four years. This improvement came as vendors sought to deliver items more quickly to secure business amid easing supply-side pressures following protest-related disruptions.

Input price inflation moderated for the second straight month, reaching its weakest level since May despite ongoing concerns about higher taxes and rising prices for fuel and food items. Meanwhile, companies increased their selling prices at a modest rate, slightly higher than the 12-month low recorded in August.

"Business conditions expanded in September, implying the start of a recovery after the disruptions that followed protests in Q2:25," said Christopher Legilisho, Economist at Standard Bank.

"New orders and output strengthened as consumer demand improved, despite some firms reporting caution from clients due to still challenging economic conditions."

Despite these improvements, purchasing activity continued to decline in September as businesses cited that low sales in recent months had affected their ability to buy new inputs.

Looking ahead, Kenyan businesses maintained strong confidence about future activity. While slightly lower than August, the 12-month outlook remained among the best observed in nearly three years, with many firms planning to expand outlets, diversify product offerings, and increase marketing efforts.

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