Kenya’s private sector edges toward recovery in August 2025 as PMI hits 49.4, business confidence soars, and hiring reaches a 15-month high.
Kenya’s private sector showed signs of recovery in August 2025, edging closer to growth as business confidence reached a two-and-a-half-year high.
According to Stanbic Bank Kenya, the Purchasing Managers’ Index (PMI) rose to 49.4 in August from July’s 12-month low of 46.8, indicating the softest contraction since May. A reading above 50 signals expansion, while anything below reflects contraction.
“The Stanbic Bank Kenya PMI pointed to a near recovery in business conditions across the private sector in August, after July data signalled that business activity was heavily dented by weak sales and protest-led disruption,” the bank said in its PMI report on Wednesday.
Softer Declines in Activity
The data showed that output, new orders, and purchasing fell at slower rates, while inventories returned to growth and employment expanded for the seventh consecutive month. Job creation, though mild, was the fastest in 15 months.
This was an improvement compared to
“New orders received by Kenyan businesses fell for the fourth month running in August,” the report noted. “However, the rate of decline softened markedly and was the slowest recorded in this period.”
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Christopher Legilisho, Economist at Standard Bank, said employment conditions supported increased hiring, but noted that backlogs declined for a third month in a row, showing demand remains fragile.
Rising Costs but Softer Pricing
Despite the improvement, businesses faced mounting price pressures. Annual inflation rose to 4.5% in August, the highest since June 2023, up from 4.1% in July. When Kenya’s pmi hit a one year low as a result of protests.
Firms saw another sharp rise in input costs, largely from higher wages as companies adjusted salaries to offset living costs. Some firms also cited higher fuel levies and recent tax changes.Kenya’s
Still, output charges increased only marginally, marking the smallest rise in 12 months, as companies sought to attract demand.
“Output prices were increased only modestly,” Legilisho said. “However, there was a notable rise in wage costs … implying that inflation is rising against the backdrop of subdued aggregate demand.”
Confidence at a 30-Month High
Business optimism strengthened, with expectations for future output hitting their highest level since February 2023.
Companies said they were banking on new marketing efforts and product diversification to drive growth.
“Firms, especially in manufacturing, are more upbeat about output over the next 12 months, which should imply healthier business activity in the coming months,” Legilisho added.
