By Benadeta Mwaura - Reporter
Kenya, July 3, 2026 - Kenya's private sector showed signs of recovery in June after three consecutive months of contraction, with business activity stabilising as inflationary pressures eased and firms adjusted to improving market conditions, according to the latest Stanbic Bank Kenya Purchasing Managers' Index (PMI).
The monthly survey shows the PMI rose to 50.0 in June, up sharply from 46.6 in May, signalling that private sector activity neither expanded nor contracted during the month.
A PMI reading above 50 indicates growth, while a figure below that threshold points to a contraction in business activity. June's reading therefore, marks the end of a three-month decline that had weighed on businesses across the country.
The improvement comes as Kenya's inflation rate eased to 6.4% in June, down from 6.7% in May, offering some relief to businesses and consumers following months of elevated prices driven largely by higher fuel costs and imported inflation.
The latest survey suggests businesses are beginning to recover from the slowdown witnessed in the second quarter of the year, when rising operating costs, weaker consumer demand and geopolitical tensions disrupted commercial activity. The June reading indicates that while the recovery remains fragile, firms are seeing more stable trading conditions than in previous months.
The rebound is expected to support the government's economic outlook. The National Treasury projects Kenya's economy will grow by 5.0% in 2026, before accelerating to 5.2% in 2027, following an estimated 4.6% expansion in 2025.
More from Kenya
The improved PMI also comes amid a series of policy interventions aimed at stimulating economic activity, including lower interest rates by the Central Bank of Kenya (CBK), easing inflation, and continued public investment in infrastructure and housing.
However, economists caution that risks remain. Global uncertainties, including geopolitical tensions in the Middle East, volatile energy prices and weaker global demand, could still affect Kenya's largely import-dependent economy in the coming months. Businesses also continue to monitor exchange rate movements and consumer spending, which remain key drivers of private sector performance.
Although the June PMI signals that the economy has emerged from contraction, analysts say sustained expansion will depend on stronger domestic demand, continued price stability and improved business confidence during the second half of the year. A PMI reading of exactly 50.0 indicates that the economy has reached a turning point, but stronger readings above that level in subsequent months will be needed to confirm that a broader recovery is underway.