The latest survey data from Stanbic Bank Kenya, as part of the Purchasing Managers' Index (PMI) survey, revealed a minor deterioration in Kenya's private sector for September 2024.

The PMI figure dropped from 50.6 in August to 49.7, indicating a slight contraction in business activity.

This marked a reversal from August’s short-lived recovery, which followed the disruptions caused by earlier protests.

Economic challenges, including reduced cash flow, led to a decline in sales for many businesses, pushing them to cut back on operations.

Nevertheless, some companies reported positive trends, such as increased customer turnout, better investments, and gains from marketing efforts.

Despite the general slowdown, input price inflation eased, contributing to only a modest rise in output prices.

Sectors within the Kenyan economy showed mixed results.

The service industry, along with agriculture and retail, experienced a notable downturn. 

In contrast, the manufacturing and construction sectors posted gains, indicating sector-specific resilience.

According to Christopher Legilisho, an economist at Standard Bank, "Business conditions contracted slightly in September, implying that the pickup in August was due to some recovery after the disruptions caused by protests earlier this year. New orders and output were weak due to subdued consumer demand – notwithstanding some firms reporting increased client turnout and higher investments."

In terms of employment, the private sector showed some stability following a decline in August, with companies maintaining workforce numbers due to softened capacity pressures.

However, overall business confidence remained low, with only 4 per cent of firms expressing optimism for growth in the coming year.

On the pricing front, the September survey pointed to a moderation in cost pressures.

The rise in purchase prices was milder than in previous months, reflecting stable input costs.

Legilisho highlighted that “there was a moderation in the expansion of purchase prices and wages in September, reflecting stable input prices for most businesses.”

Despite the challenges, companies maintained purchasing activity for the second consecutive month, bolstering their inventories in the hope of future demand improvements.

This inventory buildup was particularly notable in the manufacturing and service sectors.

Overall, while the Kenyan private sector faces economic headwinds, some firms remain cautiously optimistic about a potential improvement in demand during the final quarter of 2024.

However, business expectations remain subdued, marking the weakest outlook in the past decade.