Paul Arithi 
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- Stanbic Bank Kenya PMI®:Business conditions continue to soften as price pressures soar;
Key Findings;
Output and new orders contract for second month running
Input prices rise at fastest pace since December 2023
Stock building returns amid supply concerns
Businesses in Kenya suffered a further decline in operating conditions in April, as increasing fuel prices lifted average cost burdens and dampened customer demand.
Business activity subsequently contracted, although input inventories began to rise amid efforts by some firms to build safety stocks.
Confidence also softened, although survey respondents remained broadly positive about the outlook.
The headline figure derived from the survey is the Purchasing Managers’ IndexTM (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 49.4 in April, up from 47.7 in March, but remained below the 50.0 neutral threshold for the second month running.
While declines in output and new business kept the index in contraction territory, the respective rates of
decrease softened from March, whilst there was a renewed uplift in stocks of purchases.
Lower levels of new business were often associated with a tapering of customer spending due to rising prices, which was
mostly driven by increased fuel costs linked to the conflict in the Middle East.
That said, the overall rate of decline in sales eased markedly from March and was only marginal, as some companies reportedly benefitted from greater client interest, product innovations and marketing initiatives.
In response, firms in Kenya reduced their output to a lesser extent compared to the previous month.
Higher costs and broader economic instabilities constrained activity, but the softer fall in new orders alleviated some of these pressures.
Meanwhile, April survey data signalled a rapid intensification of input cost pressures across the Kenyan private sector.
The overall rate of cost inflation soared to its highest level since December 2023, with around 18% of survey respondents reporting a month-on-month rise in expenses.
This was chiefly attributed to increasing fuel prices, while some firms also commented on higher delivery charges and material shortages.
Christopher Legilisho, Economist at Standard Bank commented:
“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.
“Employment conditions remained robust in April, with firms mostly hiring temporary workers. Inventory levels recovered notably as firms stocked up ahead of inevitable price increases.
Quantities purchased recovered following a dip in March and supplier delivery times improved albeit at a moderate pace in April due to new and ongoing customer projects.
However, there are still concerns about subdued demand.
“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.”
Elevated costs were typically passed on to clients through increased output charges, with the overall pace of inflation also climbing to its highest since late-2023.
The markup contrasted with a relatively subdued increase in March as attempts to absorb the impact of the conflict on margins waned.
Purchasing activity continued to increase in April, but the latest expansion was modest and the softest in the current seven-month run of growth.
Nevertheless, after falling in March, inventory levels rose to the greatest extent in 2026 so far.
Anecdotal evidence indicated that some companies feared an increase in shortages and further price rises, resulting in greater efforts to build input reserves.
After a sharp drop in March, Kenyan firms signalled a more stable level of backlogs in April.Staff numbers meanwhile
increased for the fifteenth consecutive month, with survey members often citing casual hires to support ongoing projects
and business expansion efforts
Finally, business confidence slipped for the third month in a row, but remained positive overall, with approximately 18%
of panellists forecasting an expansion in output over the next 12 months.
Firms looked to development plans, diversification efforts and marketing spending as drivers of optimism.
