Kenya’s private sector economic output has started on a high note as the latest (PMI) Stanbic Bank Kenya Purchasing Managers Index (PMI) which is compiled by S&P Global from responses to questionnaires sent to purchasing managers stood at 53.7 in December.
The data reveals that, along with November’s reading of 55.0, the last two monthly PMI figures are the highest recorded in four years, with private companies recording solid upturn in the final month of 2025 thanks to a robust increase in customer demand and slight cost pressures.
It also points to a strong business growth momentum in sectors such as agriculture, mining, manufacturing, construction, wholesale, retail and services, with private sector employment levels expanding at the fastest rate at the end of the year since November 2019.
Experts say that the sharp rise in purchasing activity in December is an opportunity for Kenyan firms as it shows there is greater efforts to build stocks, secure market positions and capitalise on healthy supply chains.
One economist at Standard Bank, Christopher Legilisho says strong demand conditions are driving new business deals, in turn lifting output in the private sector.
“This suggests that year-end related overall output will likely turn out healthy. Notably, firms in most sectors highlighted increased employment, especially the construction sector, reflecting efforts by the authorities to stimulate activity,” Legilisho explains, adding that private players possibly increased their input purchases as well as inventories to facilitate faster deliveries and maintain competitiveness in response to improving economic conditions.
Readings above 50 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration. The headline PMI stood at 53.7 in December, signalling a robust upturn in the health of the non-oil sector. Notably, along with November’s reading of 55, the last two monthly PMI figures are the highest recorded in four years.
Business output increased at a sharp rate as 2025 drew to an end, with firms often relating an expansion in activity to rising order book volumes. Whilst not as substantial as that recorded in November, which was the strongest in over five years, the rate of output growth during December was still historically elevated.
Strong growth experienced by Kenyan firms in December was pushed by several factors such as improved tourism and demand in general, greater advertising and passing on subdued cost pressures to customers via more affordable prices.
Overall, the December PMI data shows robust efforts by Kenyan companies to build capacity, both to meet existing orders and in strong anticipation of future growth. Staffing levels increased, with the pace of expansion reaching the fastest seen since November 2019.
Likewise, firms raised their input purchases, marking a third consecutive month of growth. Increased purchasing efforts coincided with a strong improvement in supply chain performance in December, as average lead times decreased to the greatest extent for more than four years.
“There was an increase in input prices and output prices linked to higher customer demand in December. Purchase prices increased amid lingering concerns about taxes, production costs and other factors. Wage costs increased by a small fraction but well below the historical trend. Overall, this suggests that we could see higher inflation in the coming months from improving consumer demand as firms become more confident,” says Legilisho.
Input costs faced by Kenyan companies rose at a solid pace in December, having reaccelerated from an 18-month low in November. According to panel comments, costs typically rose due to greater tax burdens for some types of purchases, with some companies also citing higher fuel and materials prices. The overall increase in input costs was the quickest recorded in four months, but remained much softer than the survey’s long-run trend.
In a similar fashion, average selling charges rose to the greatest extent since last July. Firms’ assessments towards the year ahead remained positive and even improved slightly compared to one month ago. Qualitative feedback signalled that businesses expect output to grow in 2026 because of investment and diversification plans, staffing growth, product rebrands and increased advertising.
“There was an increase in input prices and output prices linked to higher customer demand in December. Purchase prices increased amid lingering concerns about taxes, production costs and other factors. Wage costs increased by a small fraction but well below the historical trend. Overall, this suggests that we could see higher inflation in the coming months from improving consumer demand as firms become more confident,” says Legilisho.
