Stanbic Bank Kenya Purchasing Managers' Index (PMI) Report, September 2026
Kenyan business activity returns to growth as new orders increase sharply and expectations improve
Key findings
- Output rises for first time in eight months amid sharp upturn in sales
- Business confidence strongest since early-2020
- Input cost inflation at near three-year high
The Stanbic Bank Kenya PMI® signalled a renewed rise in business activity in October, the first for eight months, supported by stronger customer demand. Firms’ expectations for future output subsequently climbed to the highest since March 2020.
Purchasing activity and inventories also increased, aided by quicker supplier deliveries. However, cost pressures intensified, with input prices rising at the steepest pace since November 2023.
The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI®). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.
The headline PMI rose to 52.5 in October, from 51.3 in September, to signal an improvement in the health of the private sector economy for the second month running. The index reading was the strongest recorded in 2026 so far.
Underpinning the upturn was a sharp acceleration in new order growth to the fastest in almost a year, amid reports from surveyed businesses of customer referrals, greater footfall and new contracts. Sales volumes have now risen for five straight months, putting pressure on firms’ operating capacities.
After previously staying in contraction during the current period of sales growth, business activity at Kenyan firms rose for the first time since February in October. That said, cash flow issues and inflation concerns meant the expansion was only modest. Manufacturing posted the quickest increases in output and new orders of the five monitored sectors.
Kenyan firms raised their input purchases at the fastest pace since January, citing stronger sales. This fed through to a steep rise in stocks of purchases, the sharpest in exactly four years. Suppliers’ delivery times also shortened at the quickest rate since September 2021, with vendors reportedly more responsive amid high competition.
Rising workloads led to a further accumulation of backlogs in October, with outstanding business increasing at the fastest rate in exactly seven years. Employment rose for the fifth month running, although the rate of job creation was modest and the slowest in the current sequence.
Around 36% of monitored firms reported an increase in total input costs in October, compared with 2% seeing a fall. The rate of inflation subsequently quickened to the fastest since November 2023, edging above June’s recent high, as panellists frequently cited higher fuel and transport costs.
Kenyan businesses subsequently raised their selling prices at a quicker pace, aiming to protect margins and pass on higher purchase costs. The rate of output price inflation was the secondfastest in three years, exceeded only by that seen in June.
Finally, business expectations strengthened markedly in October, as 51% of firms anticipated higher activity in a year’s time, up from 31% in September. Sentiment was the strongest since March 2020, with optimism linked to planned expansions, new products and services, marketing campaigns and investments.
Comment
Commenting on the survey findings, Christopher Legilisho, Economist at Stanbic Bank said:
“Kenya’s Stanbic PMI improved markedly in October due to stronger output and sustained new orders activity, implying that demand conditions for the private sector aided the improvement. Improvements were broad-based across most sectors, with construction sector the only laggard.
“Business confidence among firms improved notably; the future output index surged to its highest in six years. Further, businesses reported increases in employment.
“Additionally, firms increased input purchases at the fastest pace since January and built inventories at the quickest rate in four years, aided by shorter supplier delivery times. However, backlogs accumulated at the fastest pace in seven years, while employment growth slowed to the weakest rate in the current five-month expansion, which implies that stronger demand is stretching operating capacity,
“Rising costs remain a key constraint for the recovery. Input cost inflation reached its highest level since November 2023 due to fuel and transport costs, while selling price inflation was the second-fastest in three years as firms sought to protect margins. October’s survey therefore points to firmer demand and improved confidence, but the recovery remains constrained by price pressures, cash-flow difficulties and a modest hiring response.
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