Kenya’s private sector experienced a slight downturn in September, with output and new orders decreasing after a brief recovery in August.
The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) fell to 49.7, indicating contraction for the third time in four months. Readings above 50.0 signal an improvement in business conditions in the previous month, while readings below 50.0 show a deterioration.
Economist Christopher Legilisho attributed the decline to ongoing economic challenges facing businesses and households, which led to reduced sales and activity.
“Business conditions contracted slightly in September, implying that the pickup in August was due to some recovery after the disruptions caused by protests earlier this year.”
However, the slowdown also resulted in lower input prices, limiting the increase in output prices.
While some sectors like manufacturing and construction saw improvements, agriculture, wholesale & retail, and services experienced declines. Employment remained stable, with firms reporting little need to hire new staff.
Despite the overall downturn, input price inflation softened, leading to the weakest rise in business expenses in four months.
“Business expectations for the coming year remain at their weakest levels in a decade due to the economic headwinds of this year,” Legilisho added.
Stable exchange rates and fuel prices contributed to the moderation in cost pressures, and inflation is expected to remain around 4-4.5%.
