The private sector in Kenya continued to struggle in June 2025, with business activity declining for the second month in a row, a report has revealed.
According to the latest Purchasing Managers’ Index (PMI) by Stanbic Bank Kenya, part of the reason business declined in June includes ongoing protests and an overall difficult economic environment.
The report further revealed that the headline index dropped to 48.6 in June from 49.6 in May. This marked the sharpest drop in business conditions in nearly a year.
Notably, a headline index reading below 50.0 is a stark indication that activity in the private sector is sharply contracting.
The report observes that the downturn was also driven by a contraction in output and new orders, with more than a third of firms that were surveyed reporting dwindling sales.
Businesses that were surveyed also cited economic strain, lower customer spending, and overall disruption from nationwide protests as some of the main factors that hurt performance in June.
As far as protests are concerned, businesses were severely hampered for two weeks running, with the mayhem in Nairobi's Central Business District (CBD) peaking on June 17 and June 25.
During that time, not only were businesses closed for more than 48 hours, but the lower demand forced companies to scale back on stock buying.
The PMI report also revealed a surprising rebound in business confidence despite a subdued current outlook. Many firms and businesses hold on to optimism about future activity reaching its highest peak since May 2024.
As per the report, 18 per cent of businesses said they expect an increase in output in the next 12 months. These businesses also project improved sales and market conditions within that time.
As far as employment is concerned, there was a modest but positive trend for the fifth consecutive month. Some firms have continued to hire in anticipation of better times ahead.
The supply chain has also been on an upward trajectory, with delivery times improving to the best time seen in nearly two years. This has largely been helped by competitive pressure on vendors and reduced road congestion.
Input price inflation rose to a five-month high, mainly due to increasing wage costs and overtime payments. However, purchase price inflation eased slightly, and output prices rose only modestly. Businesses flagged tax hikes, especially on fuel, as a growing burden influencing pricing decisions.
