Nairobi— Kenya’s private sector activity returned to growth in September, supported by stronger performance in manufacturing, construction and services, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI).

The PMI rose to 51.3 in September, up from 49.7 in August, moving above the 50.0 mark that separates expansion from contraction.

The improvement signals a modest recovery in business activity after the private sector contracted in August, although rising costs and shortages of agricultural inputs continue to weigh on the broader economy.

Stanbic Bank said activity declined in the agriculture and wholesale and retail sectors, while manufacturing, construction and services recorded expansions during the month.

Rising costs and limited availability of agricultural goods constrained production, highlighting continued supply-side pressures facing Kenyan businesses.

The latest PMI data comes as inflationary pressures remain elevated. Kenya’s annual inflation rate increased to 6.8% in September, from 6.6% in August, according to the Kenya National Bureau of Statistics.

Stanbic Bank economist Christopher Legilisho said the near-term outlook remained cautiously positive, with improving demand supporting economic activity.

However, he warned that maintaining growth would depend on easing cost pressures and improving the availability of production inputs.

Without those improvements, economic expansion could remain modest while adding to inflationary pressures.

Source:Reuters

Reporting:George Obulutsa

Editing:Toby Chopra

Why it matters

Kenya’s return to private-sector growth is a positive signal for the country’s economic outlook, particularly as businesses in manufacturing, construction and services regain momentum.

However, the combination of higher inflation, rising input costs and shortages of agricultural goods remains a challenge. If supply constraints persist, businesses could face higher operating costs while consumers experience further pressure on household budgets.

For investors and policymakers, the September PMI suggests that demand in Kenya’s economy is recovering, but sustaining that momentum will require improvements in supply chains, agricultural production and the overall cost of doing business.