Kenya’s private sector experienced a contraction in May for the first time in seven months, impacted by a decline in the construction, wholesale and retail, and services sectors, according to a business survey released on Thursday.
The Stanbic Bank Kenya Purchasing Managers’ Index decreased to 49.6 in May from 52.0 the previous month. Values above 50.0 indicate an increase in business activity, while those below signify a contraction.
“Total business output contracted at the most rapid pace in 10 months in May, although the overall decline was only marginal,” stated Stanbic Bank Kenya in remarks accompanying the survey.
“The declines were primarily driven by the construction, wholesale and retail, and services sectors, while output saw an increase in agriculture and manufacturing.”
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Business expectations for the upcoming 12 months were low in May, reaching their second-lowest level on record. Only 4% of the firms surveyed anticipate improved performance during this period, according to the survey.
“Consumers are reluctant to spend due to worries about their economic situation and the bleak outlook,” remarked Christopher Legilisho, an economist at Stanbic Bank.
Kenya’s inflation rate decreased to 3.8% year-on-year in May, down from 4.1% the previous month, as reported by the statistics office.
The economy grew by 4.7% last year, a decline from 5.7% in the prior year. The finance ministry projects a growth rate of 5.3% in 2025.
