The Stanbic Bank Purchasing Managers’ Index (PMI) remained in contraction territory for the second consecutive month as Kenya’s private sector continued to face challenging operating conditions in April 2026.
While the index rose to 49.4 from March’s 47.7, any reading below the 50.0 neutral threshold indicates a deterioration in business conditions. This ongoing decline has been largely driven by high input costs and the ripple effects of international geopolitical instability.
The current downturn represents a sharp reversal from the robust growth observed late last year, when the PMI peaked at 55.0 in November 2025, its highest level in over five years. However, momentum steadily eroded throughout the first quarter of 2026, with readings declining from 53.7 in December to 51.9 in January, then 50.4 in February (barely above the neutral mark), before slipping to 47.7 in March, marking the first contraction in seven months.
Although April’s figure of 49.4 indicates that the pace of decline has eased compared to March, the private sector has yet to return to expansion territory.
Stanbic PMI Market Drivers
The current market situation has been heavily influenced by the war in the Middle East, which has introduced significant external shocks. April survey data signaled a rapid intensification of input cost pressures, with the rate of inflation soaring to its highest level since December 2023.
Businesses reported a sharp rise in expenses, primarily attributed to an increase in transport and delivery charges linked to the conflict. There were supply concerns due to apprehension regarding the ability to secure supplies from Asia and the Middle East.
Tighter household budgets were witnessed and reduced cash circulation have tapered customer spending leading to lowered consumer demands. Unlike in March, when firms were more inclined to absorb costs, April saw elevated expenses frequently passed on to clients through increased output charges.
Despite the contraction in output and new orders, staff numbers increased for the 15th consecutive month in April. This growth was supported by firms hiring temporary and casual workers to manage ongoing projects and expansion efforts.
Inventory levels recovered significantly as firms pre-emptively built up safety stocks to hedge against feared material shortages and further price hikes.
While business confidence slipped for the third month in a row, sentiment remains broadly positive. Approximately 18% of survey respondents forecast an expansion in output over the next 12 months. This optimism is underpinned by strategic development plans, including the opening of new branches, increased investment in human capital, and the diversification of product and service offerings.
“The Stanbic Kenya PMI signalled a contraction in operating conditions for a second month in April due to firms’ apprehension about the Middle East war’s impact on domestic activity. Concerns about rising costs, tied to higher transport costs, and the ability to secure supplies, especially from the Middle East and Asia, weighed on output and new orders in sectors such as wholesale and retail trade, agriculture, and services.
Further, confidence about future business expectations was down m/m, although some firms remain optimistic about their expansion plans and the increased diversification of products and services. As expected, prices rose sharply; input and output prices increased due to higher fuel prices and shipping charges because of the conflict in the Middle East. However, wage costs rose only marginally.” Christopher Legilisho, Economist at Standard Bank
