Kenya’s private sector showed clear signs of strain in March, as the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) dropped to 47.7 from 50.4 in February—marking a fourth consecutive decline and signaling worsening business conditions.
The downturn reflects a challenging economic environment characterized by reduced money circulation, shrinking household purchasing power, and escalating fuel and transport costs. These pressures, combined with logistical disruptions, have slowed supply chains and weakened overall market activity.
For the first time in seven months, firms reported a decline in new orders, prompting a reduction in production levels. At the same time, input costs surged at their fastest rate in over two years, driven by higher taxation, fuel prices, and shipping expenses. However, subdued demand and increased competition have limited companies’ ability to transfer these costs to consumers, squeezing profit margins.
In response, businesses are adopting more cautious financial strategies—cutting inventories and slowing hiring. Employment growth has nearly stalled, reaching its lowest level since October 2025, while backlogs of work have dropped sharply, reflecting reduced operational pressure.
Despite the current slowdown, business confidence remains relatively resilient. Over 20% of surveyed firms anticipate growth in the coming year, supported by expansion strategies, enhanced marketing efforts, product diversification, and continued investment in capacity and human resources.
Source: AfricaNews
