The Kenya PMI® fell into negative territory in May, as rising prices decreased customer spending and weakened business activity.
The downturn ended a seven-month run of improving business conditions, although the rate of decline was mild as businesses continued to raise their stock levels and labour capacity.
Input prices ticked at their fastest pace in four months, but overall cost pressures remained much softer than average. Conversely, selling charges rose at the weakest rate since last October as firms sought to ease the price burden on customers.
The survey’s headline figure is the Purchasing Managers’ Index™ (PMI). Readings above 50.0 signal an improvement in business conditions compared to the previous month, while readings below 50.0 show a deterioration.
April to 49.6 in May, printing below the 50.0 no-change mark for the first time since last September. This indicated a slight decline in the health of the private sector economy, following improvements in each of the previous seven months.
What was the business output in May 2025?
Total business output contracted at the fastest rate in ten months in May, although the overall downturn was only slight. While 33% of survey respondents noted that output had fallen since April, 29% reported an expansion.
Declines were generally driven by the construction, wholesale & retail and services sectors, whereas output increased in agriculture and manufacturing.
Order book inflows decreased at a modest pace, marking the first contraction since September 2024.
According to monitored firms, customer demand was lower due to rising prices and challenging economic conditions. On the other hand, several firms still cited gaining new clients and benefiting from greater marketing.
Stocks of purchases across the private sector rose for the fifth month running in May. However, a slight dip in input buying meant that the rate of accumulation was the slowest since February.
Staff numbers also grew, albeit only slightly. Firms largely commented on the hiring of short-term labour to finalise orders.
Suppliers continued to provide inputs promptly. Overall delivery times shortened for the fourth consecutive month, though only marginally.
Input price pressures accelerated throughout May, which businesses mainly attributed to greater purchase prices and heightened tax payments. The increase in costs was the quickest since January, but remained well below the series’ long-run trend.
With demand weakening, Kenyan firms made some efforts to contain the impact of higher costs on customer prices. The rate of output price inflation eased to a seven-month low and was marginal.
Business expectations for the next 12 months remained subdued in May, ticking down to their second-lowest on record. Just 4% of surveyed firms anticipate an improvement in output, citing expected branch openings and new marketing strategies.
