Kenya’s private sector continued to expand in January, although the pace of growth slowed compared to recent months, according to the latest Purchasing Managers’ Index PMI survey. The findings suggest that while business conditions remain generally positive, companies are facing a more cautious operating environment marked by softer demand, rising operational costs and ongoing economic uncertainty.
The PMI report showed that overall business activity remained above the expansion threshold, supported by steady output in several service related industries. However, new orders increased at a slower rate as firms reported reduced consumer spending power and delayed corporate investments. Businesses also noted that customers were more price sensitive, leading to restrained sales growth despite continued market activity.
Input costs remained a major concern for many companies, with rising prices for fuel, imported raw materials, utilities and transportation placing pressure on operating margins. Some firms passed higher costs on to customers through price adjustments, while others absorbed part of the increase to remain competitive. Currency fluctuations and global supply chain challenges were also cited as factors influencing procurement decisions and business planning.
Employment trends showed modest improvement, with several companies increasing staff levels to handle existing workloads and support gradual expansion. However, hiring remained cautious overall, reflecting the uncertain outlook and the need for cost control. Backlogs of work rose slightly in some sectors, indicating ongoing demand even as growth slowed.
Performance across sectors was uneven. Services, wholesale trade and consumer focused businesses displayed relative resilience, supported by domestic demand. Manufacturing and construction, however, experienced weaker activity as higher input costs and financing constraints affected production levels and project execution. Analysts noted that these trends mirror broader regional dynamics where private sector growth remains positive but less robust than earlier recovery phases.
Business confidence about the year ahead remained mixed. While firms expressed optimism about infrastructure investment, regional trade opportunities and digital transformation initiatives, concerns persisted around inflation, exchange rate pressures and access to affordable credit.
Economists say the PMI survey offers an important snapshot of Kenya’s economic momentum and will likely be closely watched by policymakers and investors. Although growth continues, sustained improvements in consumer demand, cost stability and financial conditions will be essential to strengthen private sector performance and support broader economic resilience in the months ahead.
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