More than half of Kenyan businesses now expect to be busier a year from now, the highest share since March 2020, even as they pay the steepest rise in costs in almost three years.

The Stanbic Bank Kenya Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 52.5 in October from 51.3 in September, its strongest reading of 2026 and the second straight monthly improvement. Any reading above 50 signals that business conditions are improving. The survey drew responses from about 400 private companies between October 12 and 28.

Where the growth came from

New orders grew at their fastest pace in almost a year, and sales volumes have now risen for five months in a row, according to The Star. About 31 per cent of firms reported higher output against 23 per cent that reported a fall.

  • Manufacturing led the recovery.
  • Construction was the one weak spot, with sales lower than in September.
  • Unfinished work piled up for a fifth straight month as demand outpaced capacity.

Business confidence surged: 51 per cent of firms expect activity to rise over the next 12 months, up from 31 per cent in September.

The cost squeeze

The good news comes with a sting. Input cost inflation was the fastest since November 2023, with 36 per cent of firms reporting higher expenses and just 2 per cent reporting a fall. Selling prices rose at the second-fastest pace in three years.

"Higher fuel and freight expenses raise the cost of moving goods and sourcing raw materials," said Christopher Legilisho, an economist at Stanbic Bank.

That pressure is already visible in shoppers' pockets. Official figures from the Kenya National Bureau of Statistics show annual inflation rose to 7.3 per cent in October, the highest since July 2023 and close to the top of the government's 2.5 to 7.5 per cent target band. Transport prices were up 17.1 per cent and food and non-alcoholic drinks 10.2 per cent.

What it means for jobs

For job seekers, the picture is mixed. Firms added staff for a fifth month, but hiring was the weakest of the current upturn, Reuters reported, as companies remain wary of cash-flow problems and rising costs.

"The outlook is therefore one of cautious improvement rather than a broad-based boom," Legilisho said.

The Central Bank of Kenya, which held its benchmark rate at 8.75 per cent, has raised its 2026 growth forecast to 5 per cent from 4.9 per cent. The economy grew 4.6 per cent in 2025.

Photos: The Star (Hela Intimates EPZ factory, Athi River); DEMOSH via Wikimedia Commons (CC BY 2.0). Thumbnail design: HAMASTA MEDIA.