Kenya’s private sector activity drops for second time
NAIROBI, Kenya, May 6 – Kenya’s private sector activity declined in April, as high fuel prices pushed up operating costs and weakened consumer demand.
Data from Stanbic Bank Kenya shows the Purchasing Managers’ Index (PMI) stood at 49.4 in April, signalling a contraction in business conditions for the second consecutive month. However, the reading marked a slight improvement from March’s 47.7.
A PMI reading above 50 indicates expansion, while a figure below that threshold reflects a slowdown in private sector activity.
The downturn follows a sharp increase in fuel prices by the Energy and Petroleum Regulatory Authority (EPRA), which saw super petrol rise by Sh19.32 to Sh197.60 per litre, while diesel jumped by Sh30.09 to Sh196.63.
According to Christopher Legilisho, an economist at Standard Bank, firms remained cautious amid concerns over the impact of the Middle East conflict on supply chains and domestic economic activity.
Businesses reported rising transport and shipping costs, alongside difficulties in securing supplies from key markets in the Middle East and Asia. This weighed on output and new orders, particularly in wholesale and retail trade, agriculture, and services.
Business confidence also weakened compared to March, although some firms remain optimistic about expansion plans and diversifying their products and services.
Employment conditions remained relatively stable, with most firms opting to hire temporary workers. Inventory levels rebounded as businesses stocked up in anticipation of further price increases, while purchasing activity recovered after a dip in March.
Supplier delivery times improved moderately, supported by ongoing and new customer projects. However, demand remained subdued across sectors.
Input and output prices rose sharply during the month, driven largely by higher fuel and shipping costs linked to the Middle East tensions. In contrast, wage growth remained marginal, reflecting cautious spending by firms amid uncertain economic conditions.