Stanbic Bank's February Purchasing Managers Index (PMI) reveals that 25% of Kenyan firms experienced sluggish growth amid rising input prices, marking a significant decline in output levels.
The report highlights a 2.2-point drop in the headline PMI to 51.2 from 53.2 in January, reflecting only modest improvement in the private sector's health. This marked the lowest reading since November 2017, when similar deterioration was last recorded.
Employment growth accelerated to a four-month high in February as companies expanded both permanent and casual workforces. However, this trend coincided with a third consecutive decline in backlogs, attributed to weaker new order inflows.
Regional Economist Jibran Qureishi noted that dry weather conditions contributed to the slowdown, describing the trend as cyclical. He predicted recovery as long rains begin in March and April, which historically boost domestic demand.
Despite challenges, new export orders remained strong in February, driven by Valentine's flower shipments to Europe. This supported the Kenyan shilling's stability, according to the bank's analysis.
Output growth slowed to its weakest level in 15 months, with some firms reducing production due to cash flow constraints and adverse weather. Selling prices remained largely unchanged after 14 months of increases, as firms adjusted pricing strategies to balance demand and rising input costs.
