NAIROBI: Kenya’s private sector contracted in March for the first time since August 2025, as weaker demand and disruptions linked to the Middle East conflict weighed on business activity.
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 47.7 in March from 50.4 in February, marking a fourth consecutive monthly decline. A reading below 50 indicates a deterioration in business conditions.
The survey, conducted between March 12 and 27, pointed to reduced money circulation, tighter household budgets and rising fuel and transport costs, alongside logistical bottlenecks that slowed deliveries.
New orders declined for the first time in seven months, prompting firms to scale back output. At the same time, input costs rose at the fastest pace in more than two years, driven by higher taxes, increased fuel prices and elevated shipping charges.
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Businesses, however, have struggled to pass on higher costs to customers due to weak demand and increased competition, putting pressure on margins.
To preserve cash flow, companies have reduced inventories, while hiring growth slowed to its weakest pace since October 2025. Backlogs of work also fell at the sharpest rate in nearly six years.
Despite the downturn, business sentiment remained relatively resilient, with just over one-fifth of firms expecting output to grow over the next 12 months, supported by expansion plans, increased marketing efforts, product diversification and investment in capacity and skills.
