Kenya’s private sector expands at fastest rate in 10 months, led by services and retail. Manufacturing remains a concern amid soft demand.
Kenya’s Private Sector Grows at Fastest Pace in 10 Months
NAIROBI, Kenya – March 2025 — Kenya’s private sector activity surged to its highest level since May 2024, according to the Stanbic Bank Kenya Purchasing Managers’ Index (PMI). The PMI rose to 51.7 in March, up from 50.6 in February, indicating an accelerating expansion in business activity.
Any PMI reading above 50.0 signals economic growth.
“There were robust expansions in output and new orders across several sectors such as services, wholesale, and retail,” said Christopher Legilisho, economist at Stanbic Bank Kenya. “Only the manufacturing sector exhibited soft demand.”
📌 Related: Understanding Kenya’s PMI and Its Economic Implications
🔼 What’s Driving the Growth?
Key sectors fueling the PMI rise include:
- Services
- Wholesale trade
- Retail
These industries showed strong client demand, benefiting from improving consumer confidence and easing inflation.
The expansion reflects increasing business optimism and improving credit conditions, which have been critical in stimulating economic activity since late 2024.
📌 Explore: Kenya’s Economic Forecast: 2025–2026
📉 Manufacturing Remains a Weak Spot
Despite the upbeat momentum in most sectors, manufacturing continues to contract due to:
- Currency volatility
- High import costs
- Supply chain challenges
“Persistent cost pressures and weak external demand are weighing on industrial output,” analysts note.
This underperformance raises concerns about Kenya’s ability to achieve broad-based industrialization as envisioned in the Bottom-Up Economic Transformation Agenda (BETA).
📌 Read: Why Kenya’s Manufacturing Sector Is Lagging
🔮 Stronger Economic Growth Projected
The positive PMI data aligns with the Treasury’s GDP growth forecast:
- 5.3% GDP growth expected in 2025 and 2026
- Up from an estimated 4.6% growth in 2024
This projected growth is driven by:
✅ Resilient domestic demand
✅ Improved lending conditions
✅ Stabilizing inflation
📌 Related: Kenya’s Fiscal Strategy 2025
📌 What to Watch Moving Forward
As Kenya eyes sustained recovery, private sector activity will remain a key barometer of economic health. Policymakers are expected to:
Deepen access to credit for SMEs and startups
Monitor inflation and exchange rate volatility
Support manufacturing competitiveness
