The Stanbic Bank Kenya PMI® signalled a further contraction in business activity in September, but only a fractional one, as stronger customer demand partly offset the effects of elevated cost pressures and supply-side constraints.
Businesses also reported fresh increases in purchases and inventories, alongside continued payroll growth. However, inflation remained elevated, with both overall input costs and output prices rising at faster rates than in August.
The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
The headline PMI rose to 51.3 in September, up from 49.7 in August and back above the 50.0 no-change mark. The index signalled a modest improvement in the health of the Kenyan private sector economy that was the joint-fastest since January, matching that recorded in July.
Data shows that the renewed upturn was partly linked to a stronger rate of new business growth in September. Improved market demand, customer referrals, marketing campaigns and cash injections were highlighted by panellists as factors driving sales growth.
Business conditions in Kenya
New orders have risen in every month since June. In spite of the overall improvement in demand conditions, business activity contracted for the seventh month running, although the rate of decline was the softest in the current sequence and only slight. Firms once again signalled that inflationary pressures had dampened output, while some also reported cutbacks linked to shortages of agricultural goods.
Other companies, however, were encouraged by improving sales and recovering cash flows. Kenyan firms also reported a renewed expansion in purchasing activity in September, following a four-month sequence of contraction. Although slight overall, the rise supported an increase in input inventories for the first time since June.
Suppliers’ delivery times improved for the second month running in September, though only slightly, with survey comments suggesting that material shortages had once again limited the extent of the improvement. September data revealed a further rise in employment at Kenyan companies. The rate of growth eased slightly but remained above the series trend.
Firms generally attributed staff recruitment to rising workloads, as illustrated by an increase in outstanding work for the fourth month running. Around 30% of monitored firms reported an increase in total input costs in September, compared with 1% seeing a fall. This signalled another marked rise in average cost burdens.
Rate of cost inflation in September 2026
The rate of cost inflation also quickened from August, as panellists commonly noted higher prices for fuel, transport and agricultural products. As firms sought to maintain profit margins, average prices charged by Kenyan businesses rose sharply during September. The rate of output price inflation quickened to the second-fastest since November 2023, exceeded only by the rate recorded in June 2026.
Finally, business activity expectations slipped to a four-month low in September but remained among the strongest seen for over five years. Companies anticipating an improvement in activity mostly commented on capacity expansion efforts, technology investments, increased marketing, and new products and services.
