Kenya’s private sector witnessed robust growth in May, according to the Purchasing Manager Index (PMI) released by Stanbic Bank Kenya.
The PMI rates for May stood at 51.8, up from 50.1 in April, marking the highest level since January 2024.
Christopher Legilisho, Economist at Standard Bank attributed the performance to the government’s commitment in easing inflation.
Improved Business Conditions
This has improved business conditions and boosted sales and production despite global economic challenges and recent floods.
“Private sector activity was surprisingly strong in May, implying a further improvement in economic activity, as we had expected to see some impact from the recent floods. Output and new orders recorded strong gains in May as firms reported increased consumer demand,” said Legilisho.
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The PMI data revealed a solid increase in new orders in May, benefiting Kenyan businesses from reduced inflationary pressures, with the inflation rate falling to 5% in April.
This decline led to the lowest input prices recorded since the pandemic lockdown in 2020.
Lower Fuel Prices
Businesses experienced lower fuel prices and reduced import costs as the Kenyan shilling strengthened against the US dollar.
The easing of inflation resulted in increased consumer spending, prompting companies to ramp up production to meet higher sales demand.
Firms also reported hiring casual employees to support new business and marketing efforts.
Growth was particularly evident in the services, manufacturing, and wholesale and retail sectors. However, heavy rains led to declines in the agricultural and construction sectors.
