Kenya’s private sector is showing signs of strain, recording its weakest performance since June 2024 as inflation and political protests take a toll on businesses.
The latest Stanbic Bank Purchasing Managers’ Index (PMI), released Tuesday, shows the index dropped to 46.8 in July, down from 48.6 in June.
It marks the third straight month of decline and falls further below the 50.0 mark, which separates growth from contraction.
“Business conditions continued to deteriorate across much of the private sector in July,” the report reads. “The index pointed to a solid downturn in overall economic health.”
Companies blamed the decline on rising prices, a dip in customer orders, and continued street protests. Many reported fewer sales, reduced cash flow, and uncertainty among clients as key reasons for holding back operations.
The slowdown hit hardest in the manufacturing and services sectors, while agriculture, construction, wholesale, and retail showed signs of resilience.
New orders fell at the sharpest rate in a year, with businesses citing lower consumer spending power and reduced foot traffic caused by unrest.
To cope, many firms scaled back purchases and trimmed inventory levels. Input costs surged largely due to higher fuel prices and increased taxes making July the most expensive month for businesses since early this year.
In response, some companies raised their prices, pushing up the cost of goods and services for consumers.
Jobs were also affected. The Employment Index fell to its lowest level in six months. Although some businesses brought in new workers for specific projects, overall hiring remained flat.
The data points to a private sector that’s struggling to maintain momentum.
Still, some firms said they hoped for a better second half of the year if inflation eases and political temperatures cool.
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