Africa-Press – Kenya. Kenya’s overall private sector activity dropped marginally in December 2025 despite the month recording fastest pace of job creation in more than six years.
The latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI), slipped to 53.7 points in December from 55.0 in November, signalling that while business conditions continued to improve, the pace of growth softened from November’s four-year high.
A rise in customer demand over the festive period and robust business activities saw the last two readings post the highest recorded in four years, signalling sustained momentum across the non-oil private sector as firms head into 2026 with renewed confidence.
“The Stanbic Bank Kenya Purchasing Managers Index (PMI) stayed in expansion territory, albeit slower this month, implying still strong demand conditions are driving new orders, in turn lifting output in the private sector at the end of the year,” said Standard Bank economist Christopher Legilisho.
The index shows that companies across most sectors reported higher activity levels, with growth supported by improved tourism, increased advertising, better cash flow and the ability to pass on subdued cost pressures through more competitive pricing.
Rising demand also translated into strong sales growth, marking the fourth consecutive month of expansion in new orders.
Firms attributed the increase to improved travel activity, affordable pricing strategies and enhanced marketing efforts, reinforcing optimism about near-term business prospects.
A rise in demand saw firms in most sectors highlighted increased employment, especially the construction sector, reflecting efforts by the authorities to stimulate activity.
“There was an increase in input prices and output prices linked to higher customer demand in December. Purchase prices increased amid lingering concerns about taxes, production costs and other factors,” said Legilisho.
“Wage costs increased by a small fraction but well below the historical trend. Overall, this suggests that we could see higher inflation in the coming months from improving consumer demand as firms become more confident.”
However, wholesale and retail businesses registered a fresh decline in output, standing out as the only sector to buck the broader expansion trend.
The upbeat demand environment prompted firms to expand capacity, resulting in the strongest employment growth since November 2019.
Job creation was widespread across sectors, but was particularly pronounced in construction, reflecting ongoing public and private investment aimed at stimulating economic activity.
As staffing levels increased, businesses were able to reduce outstanding workloads further. Backlogs of work declined for a seventh consecutive month, marking the longest period of backlog reduction in over 11 years, suggesting that capacity expansion is helping firms meet demand more efficiently.
Purchasing activity also picked up sharply in December, with companies increasing input purchases for a third straight month.
The pace of growth in purchasing was the second-fastest in over five years, reflecting efforts to build inventories, secure supplies and maintain competitiveness amid improving market conditions.
Encouragingly, supply chain performance strengthened further, with supplier delivery times improving at the fastest pace in more than four years. Firms cited increased competition among vendors, which encouraged quicker deliveries as suppliers sought to retain business.
While growth conditions remained favourable, inflationary pressures showed signs of reacceleration.
Input costs rose at the fastest rate in four months, rebounding from an 18-month low recorded in November.
Survey respondents pointed to higher tax burdens, fuel costs and increased prices for raw materials as key drivers of the uptick.
Despite the rise, overall cost pressures remained below the long-run average, offering some relief to businesses.
Wage growth was particularly subdued, with most firms reporting no change in staff costs during the month. Where wages did rise, increases were modest and linked mainly to higher living costs.
Looking ahead, about one in five firms expects output to increase over the next year, supported by investment plans, diversification strategies, product rebranding, expanded marketing and workforce growth.
