The Stanbic Bank Kenya Purchasing Managers’ Index (PMI) dropped for the third consecutive month, falling to 50.4 in February from 51.9 in January. The Kenyan private sector narrowly avoided a total contraction in February 2026. This reading, which is only slightly above the 50.0 neutral threshold, marks the slowest pace of expansion in the current six-month growth sequence.
The February result highlights a sharp cooling of the Kenyan economy since the multi-year peaks observed at the end of 2025. In November 2025 the PMI was at 55.0 growth reached a five-year high, driven by the sharpest increase in business activity and new work in over five years. In December 2025 53.7 the momentum remained solid, finishing the year with the highest two-month growth period in four years.
The new year began with a noticeable moderation, as output and new business growth hit four-month lows with a PMI reading of 51.9 and in February it was at 50.4 showing that business activity has now almost stalled, with only 33% of surveyed firms reporting an increase in activity while 32% reported a decline.
PMI Key drivers in February
The primary driver for the February slump was a weakening in sales growth. Total new business received by Kenyan companies rose at the weakest rate in six months. While firms used marketing and price promotions to attract customers, these efforts were countered by difficult macroeconomic conditions, low client purchasing power, and intense competition.
Sectoral performance showed a distinct split, construction, wholesale & retail, and services registered sales growth, while agriculture and manufacturing entered downturns. Despite the near stagnation in output, the labor market remains resilient. Job numbers rose for the 13th consecutive month, and the pace of hiring actually accelerated from January. Firms took on additional staff to manage busy workloads and clear backlogs, which had remained broadly unchanged after eight months of depletion.
This contrasts with December, which saw the fastest rate of job creation since November 2019, and January, where hiring had initially softened alongside cooling activity.
A significant positive in the February report was the easing of inflationary pressures to a three-month low at 4.3%. The rate of increase in overall input costs slowed, though material prices and the impact of higher VAT were still cited as concerns. This is a reversal from December, when costs reaccelerated from an 18-month low recorded in November. Because cost pressures eased, companies raised their average selling charges at the softest pace since November.
Kenyan firms remain relatively confident about the year ahead. Approximately 21% of respondents expect output to rise over the next 12 months, a figure that was little changed from January.
“The Stanbic Kenya PMI cooled in February as firms reported only modest surges in new orders and steady
output. While the outcome was still expansionary, some businesses were hampered by increased competition and a doubtful economy. Although macroeconomic conditions have improved, the broader economy has not
yet seen the benefits; sections of the private sector are still feeling the strain.However, expectations for the next 12-m held steady; about a fifth of firms in the survey remain optimistic about future output. Further, job growth momentum was sustained, signaling underlying improvement in the private sector. Additionally, purchasing demand was resilient as both quantities purchased and inventories increased, though at a slower pace. Input prices and purchase costs increased in February, attributable to higher operating costs and tax concerns, though improved supply of inputs helped to contain increases. Output prices were up only slightly as discounts and increased competition restrained momentum” Christopher Legilisho, Economist at Standard Bank
