12 Jan 2026

Stanbic Bank Kenya Purchasing Managers' Index (PMI) Report, December 2025

Kenya finishes 2025 with another solid expansion in private sector business conditions

Key findings

Firms report marked rises in activity, sales and purchases
Strongest rate of employment growth in over six years
Inflationary pressures reaccelerate from November low

Kenya's private sector economy recorded another solid upturn in the final month of 2025, as business activity was again boosted by a robust increase in customer demand and mild cost pressures. Strong growth momentum led companies to expand their employment levels at the fastest rate since November 2019.

Kenyan firms also reported a sharp rise in purchasing activity in December, indicating greater efforts to build stocks, secure market positions and capitalise on healthy supply chains. Expectations for future output meanwhile improved, despite a quicker uptick in the rate of input price inflation.

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 a deterioration.

The headline PMI stood at 53.7 in December, signalling a robust upturn in the health of the non-oil sector. Notably, along with November's reading of 55.0, the last two monthly PMI figures are the highest recorded in four years.

Business output increased at a sharp rate as 2025 drew to an end, with firms often relating an expansion in activity to rising order book volumes. Whilst not as substantial as that recorded in November, which was the strongest in over five years, the rate of output growth during December was still historically elevated.

Kenyan firms also reported a strong increase in sales volumes in December. Anecdotal survey reports pointed to several factors enhancing growth, such as improved tourism and demand in general, greater advertising and passing on subdued cost pressures to customers via more affordable prices.

Overall, the December PMI data indicated robust efforts by Kenyan companies to build capacity, both to meet existing orders and in strong anticipation of future growth. Staffing levels increased, with the pace of expansion reaching the fastest seen since November 2019. Likewise, firms raised their input purchases, marking a third consecutive month of growth. Increased purchasing efforts coincided with a strong improvement in supply chain performance in December, as average lead times decreased to the greatest extent for more than four years.

Input costs faced by Kenyan companies rose at a solid pace in December, having reaccelerated from an 18-month low in November. According to panel comments, costs typically rose due to greater tax burdens for some types of purchases, with some companies also citing higher fuel and materials prices. The overall increase in input costs was the quickest recorded in four months, but remained much softer than the survey's long-run trend. In a similar fashion, average selling charges rose to the greatest extent since last July.

Firms' assessments towards the year ahead remained positive and even improved slightly compared to one month ago. Qualitative feedback signalled that businesses expect output to grow in 2026 because of investment and diversification plans, staffing growth, product rebrands and increased advertising.

Comment

Christopher Legilisho, Economist at Standard Bank commented:

“The Stanbic Bank Kenya Purchasing Managers Index (PMI) stayed in expansion territory, albeit slower this month, implying still strong demand conditions are driving new orders, in turn lifting output in the private sector at the end of the year. This suggests that year-end related overall output will likely turn out healthy. Notably, firms in most sectors highlighted increased employment, especially the construction sector, reflecting efforts by the authorities to stimulate activity. Furthermore, firms reportedly increased their input purchases as well as inventories to facilitate faster deliveries and maintain competitiveness in response to improving conditions.

“There was an increase in input prices and output prices linked to higher customer demand in December. Purchase prices increased amid lingering concerns about taxes, production costs and other factors. Wage costs increased by a small fraction but well below the historical trend. Overall, this suggests that we could see higher inflation in the coming months from improving consumer demand as firms become more confident.”