Kenya Feb. whole economy PMI falls to 50.4 vs. 51.9 in Jan.

Kenya Feb. whole economy PMI falls to 50.4 vs. 51.9 in Jan.

Kenya’s February PMI Signals Slower Economic Expansion

Kenya’s private sector growth moderated in February, with the Stanbic Bank Kenya Purchasing Managers’ Index (PMI) falling to 50.4 from 51.9 in January, indicating a continued but decelerating expansion. The index, which measures business activity across sectors, remains above the 50.0 threshold—a level separating growth from contraction—but the decline reflects weakening momentum compared to the previous month.

Sectoral performance remained uneven in January, the most recent month detailed in available data. Manufacturing firms reported the strongest sales growth, driven by increased customer demand and new contracts. In contrast, the construction and wholesale/retail sectors experienced outright demand declines, contributing to the PMI’s downward trend. The slowdown in construction and retail activity appears to have offset gains in other areas, tempering overall growth.

Kenya’s finance ministry projects economic growth of 5.3% in 2025 and 2026, up from 4.7% in 2024. Similarly, the World Bank revised its 2025 growth forecast to 4.9%, maintaining this rate for the following two years. These projections suggest policymakers and international institutions remain cautiously optimistic about Kenya’s economic trajectory despite the recent PMI softness.

The February PMI reading of 50.4 marks the slowest expansion since last September and underscores persistent challenges in sustaining robust private-sector activity. While business activity remains above the growth threshold, the narrowing margin highlights vulnerabilities in key sectors. Investors should monitor upcoming data for signs of stabilization or further deterioration, particularly in construction and retail, which could influence broader economic outcomes.

For now, Kenya’s economy appears to be navigating a mixed landscape, with manufacturing resilience partially offset by weaknesses in other critical areas. The PMI’s gradual decline signals the need for targeted policy interventions to address sector-specific bottlenecks and sustain projected growth rates.