Kenya’s private sector economy closed 2025 with strong growth momentum, supported by rising customer demand, expanding employment and resilient supply chains. This is according to the latest Stanbic Bank Kenya Purchasing Managers’ Index PMI.
The PMI, compiled by S&P Global and sponsored by Stanbic Bank Kenya, stood at 53.7 in December, signalling a robust improvement in business conditions. Readings above 50 indicate expansion. Alongside November’s 55.0, the December figure marks the strongest performance in four years for the non-oil private sector.
Business Activity and Output Growth
Business activity expanded sharply in the final month of 2025, with firms attributing growth to increased order book volumes and improved demand conditions. Although output growth eased slightly from November’s five-year high, December’s expansion remained historically elevated.
Survey respondents highlighted improved tourism activity, stronger general demand, increased advertising efforts and the ability to pass on subdued cost pressures to customers through more affordable pricing as key drivers of growth.
Employment and Capacity Expansion
Strong growth conditions encouraged firms to scale up operations. Employment levels rose at the fastest pace since November 2019, reflecting companies’ efforts to boost capacity and meet both current and anticipated demand.
Purchasing activity also increased sharply in December, extending a third consecutive month of growth. Firms reported higher input buying as they sought to build stocks, secure market positions and capitalise on healthier supply chains.
Supply Chains and Purchasing Trends
Supply chain performance improved notably towards the end of the year. Average supplier lead times shortened to the greatest extent in more than four years, indicating smoother logistics and better availability of inputs. This improvement supported firms’ increased purchasing activity and stock-building strategies.
Cost Pressures and Pricing
Input costs rose at a solid pace in December, reaccelerating from an 18-month low recorded in November. Companies cited higher tax burdens on certain purchases, alongside rising fuel and materials prices, as key contributors to cost increases.
Despite the uptick, overall input price inflation remained softer than the survey’s long-run average. In response, firms raised selling prices at the fastest rate since July, signalling a cautious pass-through of higher costs to customers.
Business Confidence and 2026 Outlook
Business optimism strengthened further in December. Firms expressed confidence that output will grow in 2026, underpinned by planned investments, diversification strategies, staffing increases, product rebrands and higher advertising spend.
Stanbic Bank PMI data indicate that Kenyan businesses ended 2025 in a strong position, with solid demand, improving supply chains and positive expectations supporting a resilient outlook for the year ahead.