Key insights
- Kenyan business conditions softened in April due to rising fuel costs, leading to higher prices and reduced customer demand. The PMI remained in contractionary territory, although the rate of decline eased slightly. While this is primarily a Kenyan issue, it highlights the broader global impact of rising energy prices and supply chain disruptions, which could indirectly affect US equities if these trends intensify globally.
Investing.com -- Businesses in Kenya saw operating conditions deteriorate for the second consecutive month in April as rising fuel prices drove up costs and weakened customer demand, according to the latest Stanbic Bank Kenya Purchasing Managers’ Index.
The headline PMI registered 49.4 in April, up from 47.7 in March but still below the 50.0 threshold that separates expansion from contraction. The index remained in negative territory as output and new business declined, though both fell at slower rates than the previous month.
New business orders dropped as customers reduced spending in response to higher prices, primarily driven by increased fuel costs linked to the Middle East conflict. The decline in sales eased markedly from March and remained marginal overall, with some companies reporting benefits from greater client interest, product innovations and marketing initiatives.
Input cost pressures intensified rapidly across Kenya’s private sector in April, with the rate of cost inflation reaching its highest level since December 2023. Around 18% of survey respondents reported month-on-month expense increases, mainly attributed to rising fuel prices, higher delivery charges and material shortages.
Companies passed elevated costs to clients through increased output charges, with the pace of inflation also climbing to its highest since late 2023. The markup contrasted with a relatively subdued increase in March.
Inventory levels rose to the greatest extent in 2026 so far after falling in March, as some companies feared shortages and further price rises, leading to greater efforts to build input reserves. Purchasing activity continued to increase but the expansion was modest and the softest in the current seven-month growth period.
Staff numbers increased for the fifteenth consecutive month, with companies citing casual hires to support ongoing projects and business expansion efforts. Backlogs remained relatively stable after a sharp drop in March.
Business confidence slipped for the third month in a row but remained positive overall, with approximately 18% of panellists forecasting output expansion over the next 12 months. Companies pointed to development plans, diversification efforts and marketing spending as drivers of optimism.
Christopher Legilisho, economist at Standard Bank, said the PMI signaled contraction in operating conditions for a second month in April due to firms’ concerns about the Middle East war’s impact on domestic activity.
Worries about rising costs tied to higher transport costs and the ability to secure supplies, especially from the Middle East and Asia, weighed on output and new orders in sectors including wholesale and retail trade, agriculture and services.
The survey collected data from April 9-28.
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