The downturn was largely driven rising oil prices that saw inflation rise to 6.7% in May Kenya’s private sector recorded its sharpest deterioration in business conditions in 10 months during May, as rising inflation, higher operating costs and weakening consumer demand combined to slow activity across key sectors of the economy.
The latest Purchasing Managers’ Index (PMI) data shows that business conditions worsened significantly, with the headline index falling to 46.6 in May from 49.4 in April. A reading below 50 signals a deterioration in business activity, while a figure above that level indicates improvement.
The latest reading marks the fastest decline in the private sector's health since July 2024. The downturn was largely driven by a notable contraction in business activity and new orders as firms grappled with mounting cost pressures. At the same time, customers scaled back spending amid tighter household and corporate budgets.
The weak performance comes as inflation accelerated to 6.7 per cent year-on-year in May from 5.6 per cent in April, raising concerns about the cost of living and the broader impact on economic activity. Businesses reported that inflationary pressures reduced customers’ purchasing power, resulting in greater caution in spending decisions and delays in placing new orders.
According to the survey, new sales declined at the fastest pace since mid-2025 as clients became increasingly hesitant to spend. Many firms cited constrained budgets among consumers and businesses, which weighed heavily on demand conditions during the month. The slowdown was particularly evident in the construction and services sectors, where both output and new orders declined.
Manufacturers, however, provided a rare bright spot, emerging as the only sector to record growth in production during the period. With new business volumes falling, companies faced reduced pressure on capacity and responded by trimming their workforce for the first time in 16 months.