Kenya Private Sector Contracts Sharply for Second Month in 11-Month Low

Kenya's private sector experienced its sharpest contraction in nearly a year in June 2025, with the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) falling to 48.6 from 49.6 in May, signaling a slowdown for the second consecutive month. The decline was mainly driven by reduced consumer spending, challenging economic conditions, and operational disruptions caused by widespread protests, which also resulted in significant social unrest and casualties. Despite the downturn, some positive signs emerged, including a fifth consecutive month of marginal employment growth, improved supplier delivery times, and increased business confidence, with 18% of firms optimistic about boosting output in the next year. Input price inflation rose to a six-month high due to higher salary costs and increased tax burdens, while output price growth moderated as firms sought to retain customers. Businesses also ramped up stockpiling, anticipating future demand recovery, reflecting cautious optimism for improved sales and market expansion in the latter half of 2025. Overall, Kenya's private sector faces ongoing headwinds but is preparing for a potential rebound amid persistent economic and social challenges.