Kenya's private sector returned to growth in October, with business activity rising for the first time in eight months as new orders increased sharply. The Stanbic Bank Kenya Purchasing Managers' Index rose to 52.5 in October, up from 51.3 in September, its strongest reading of 2026 so far.

A reading above 50 signals an improvement in business conditions on the previous month. The October figure, published on 4 November, marked the second month in a row above 50 and pointed to a firmer recovery in the private sector after a long soft patch.

Output rises for the first time since February

Output at Kenyan firms rose for the first time since February, with 31 percent of surveyed firms reporting higher output and 23 percent reporting lower. New orders rose for a fifth consecutive month, and at the fastest rate in almost a year, as firms cited customer referrals, greater footfall and new contracts.

Manufacturing posted the fastest rises in output and new orders among the five sectors monitored. Construction was the only sector to report lower sales in October. Sales volumes have now risen for five straight months, putting pressure on firms' operating capacity.

Confidence at its strongest since 2020

Business expectations strengthened markedly. The share of firms expecting higher activity in a year's time rose to 51 percent, up from 31 percent in September, the strongest outlook since March 2020. Christopher Legilisho, an economist at Stanbic Bank, said the PMI had improved markedly in October because of stronger output and sustained new orders.

Employment rose for a fifth month and across all sectors, although at the slowest rate of that run. Firms also raised their input purchases for the first time since April, according to the survey, as rising demand encouraged them to stock up.

Costs still climbing

Price pressures remain a challenge. About 36 percent of firms reported higher input costs in October, against 2 percent that reported a fall, and input cost inflation quickened to the fastest since November 2023. Firms raised their own selling prices at the second fastest rate in three years, behind only June 2026.

Kenya's annual inflation rate rose to 7.3 percent in October, up from 6.8 percent in September, according to the Kenya National Bureau of Statistics. The PMI price readings come from firms' own reports on costs and charges.

The survey, compiled by S&P Global, collected responses from a panel of about 400 private sector companies between 12 and 28 October. The improvement in activity was accompanied by a warning from Legilisho that the recovery remains constrained by price pressures, cash-flow difficulties and a modest hiring response, even as demand and confidence improve.