News Release
Embargoed until 10:30 EAT (07:30 UTC), 4 March 2026
PMI falls from 51.9 in January to 50.4 in February
Business activity nearly stalls
New orders rise at weakest pace in six months
Input cost inflation eases to three-month low
Kenya’s private sector moved closer to stagnation in February, as growth momentum softened and business activity nearly stalled, according to the latest Purchasing Managers’ Index™ (PMI®) released by Stanbic Bank Kenya.
The headline PMI fell for the third consecutive month to 50.4, down from 51.9 in January. While the reading remains marginally above the 50.0 neutral mark — signalling continued improvement in business conditions — it represents the weakest expansion in the current six-month growth sequence.
The survey is compiled by S&P Global.
Output levels were broadly unchanged during February, with the seasonally adjusted Output Index only slightly above the neutral threshold. Approximately 33% of firms reported increased activity, while 32% recorded declines, reflecting subdued market conditions.
New orders continued to rise for a sixth successive month, but growth slowed to its weakest pace in that period. Companies that reported stronger sales attributed gains to new product launches, expanded marketing efforts and price promotions. However, other firms cited financial constraints among customers, low purchasing power and heightened competition.
Sector performance was mixed. Construction, wholesale & retail, and services recorded growth, while agriculture and manufacturing experienced contractions.
In line with softer new business growth, purchasing activity increased at a slower pace. Input buying rose for the fifth consecutive month but at its weakest rate since October 2025.
Inventory accumulation also slowed, with stocks of purchases rising only marginally — the softest expansion in seven months — as firms limited stock-building amid weaker demand.
Supplier delivery times improved for a second straight month, although the pace of improvement eased compared to January due to vendor congestion, heavy road traffic and port delays.
Despite softer output growth, employment continued to expand, extending the hiring trend that began in February 2025. The pace of job creation accelerated compared to January, supported by increased workloads and new project starts.
Backlogs of work stabilised in February after eight consecutive months of decline, helping to sustain hiring momentum.
Overall input cost inflation moderated to its slowest pace in three months. Purchase prices and staff costs both rose at softer rates, although firms continued to cite higher raw material costs and VAT impacts.
With cost pressures easing and competition intensifying, companies raised selling prices at the slowest pace since November. While some firms passed higher costs on to customers, others offered discounts to remain competitive.
Business expectations for the next 12 months remained stable. Just over one-fifth of surveyed firms anticipate higher output over the coming year, citing hopes of stronger demand, improved economic conditions, product innovation and increased marketing activity.
Optimism remained above the average recorded in 2025.
Christopher Legilisho, Economist at Standard Bank, said:
“The Stanbic Kenya PMI cooled in February as firms reported only modest increases in new orders and largely steady output. While the private sector remained in expansion territory, increased competition and lingering economic uncertainty constrained stronger growth.
Encouragingly, expectations for the year ahead remain firm, with employment growth continuing to signal underlying resilience. Although input costs rose further in February, improved supply conditions helped contain inflationary pressures, and output price increases were limited by competitive dynamics.”
The Stanbic Bank Kenya PMI® is compiled from monthly responses to questionnaires sent to approximately 400 private sector companies across agriculture, mining, manufacturing, construction, wholesale, retail and services.
A PMI reading above 50.0 indicates improvement compared to the previous month, while a reading below 50.0 signals deterioration.
Data for the February survey were collected between 10–25 February 2026.
© 2026 S&P Global
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