Kenya’s private sector ended 2025 with solid momentum, underscoring the economy’s resilience amid a challenging macroeconomic environment. According to the Stanbic Bank Kenya Purchasing Managers’ Index (PMI), December’s reading stood at 53.7, comfortably above the 50.0 threshold that separates growth from contraction. This performance reflects stronger demand, rising business activity, and a notable increase in employment across key sectors.The PMI data shows that firms experienced improved customer demand toward the end of the year, supported by relatively stable operating conditions and sustained domestic consumption. New orders expanded at a faster pace, encouraging businesses to scale up output and replenish inventories. This growth in activity signals renewed confidence among private sector players, many of whom had adopted a cautious stance earlier in the year due to economic uncertainty.
One of the most striking highlights from the December PMI was employment growth. Hiring rose at its fastest pace since 2019, indicating that businesses are not only responding to higher demand but are also optimistic about near-term prospects. Increased staffing levels are particularly significant in a context where job creation remains a key policy priority for Kenya, especially for youth and urban workers.Despite these positive indicators, the report also points to persistent cost pressures. Businesses continued to face higher input costs, largely driven by increased taxation and elevated fuel prices. These factors contributed to inflationary pressures that weighed on operating margins, forcing some firms to raise output prices. However, the ability of companies to pass on part of these costs to consumers without significantly dampening demand suggests a relatively robust market environment.
Sectoral performance remained mixed but broadly positive. Services and wholesale and retail trade recorded solid expansions, supported by year-end demand and improved customer flows. Manufacturing also showed signs of stabilization, benefiting from stronger orders, although producers remained sensitive to energy and transport costs. Construction activity held steady, reflecting ongoing infrastructure projects and private developments.The strong PMI reading adds to a series of indicators pointing to Kenya’s economic resilience in 2025. While challenges such as high public debt, tax burdens, and global economic uncertainty persist, the private sector’s performance demonstrates an underlying capacity to adapt and grow. Sustained expansion in business activity and employment could help support overall economic growth, boost household incomes, and strengthen consumer confidence going into 2026.Looking ahead, the outlook for Kenya’s private sector will depend on policy stability, inflation management, and access to affordable financing. If cost pressures ease and demand remains firm, the momentum seen at the close of 2025 could carry into the new year, reinforcing the private sector’s role as a key engine of economic growth.
