Business activity in the Kenya’s private sector expanded markedly in October, according to the latest survey data, as companies highlighted a further improvement in sales intakes on the back of broader economic strengthening.

Rising demand encouraged firms to increase their purchasing activity for the first time since April in addition to the improved economic environment which was also supported by a milder increase in business expenses, with input costs rising at the slowest pace in just over a year.

In a press statement sent to newsrooms, a survey by Stanbic Bank Kenya portrayed the Purchasing Managers’ Index (PMI), which registered in expansion territory for the second month running in October.

At readings of 52.5, up from 51.9 in September, the index signalled a solid improvement in overall operating conditions, the highest index reading since February 2022.

Additionally, the PMI survey indicated a further rebound in the Kenyan private sector following the disruptions caused by protests in the second quarter of the year. Output and new business intakes increased for the second consecutive month with both growth rates accelerating.

In terms of output, the latest expansion was the strongest since December 2021. Firms frequently cited robust demand conditions amid improving economic prospects, along with the impact of new product launches and promotional pricing strategies.

Notably, all of the main sectors monitored by the survey experienced an upturn in activity in October. This contributed to a broad-based increase in input procurement, with total purchasing activity rising for the first time since April.

“There were also some initiatives to enhance workforce capacity, although the pace of job creation was only marginal,” read the statement.

Similarly, Kenyan businesses reported relatively stable conditions regarding supply chains and price pressures at the start of the fourth quarter. Lead times shortened for the ninth consecutive month, with panellists often attributing efficiency gains to subdued input demand in recent months and increased vendor competition.

However, the pace of improvement eased from September’s four-year high and with purchases increasing and delivery times improving, Kenyan firms were able to expand their input inventories during October.

Regarding prices, firms indicated that input costs rose in October but only marginally. In fact, the overall rate of inflation was the slowest in 13 months, with both purchase prices and overall wage costs increasing at a slower pace than in September.

“When cost increases were reported, businesses mainly cited a combination of rising import prices and higher taxes, including increases in VAT and fuel duties,” the statement read.

Likewise, output prices also increased, but the rate of growth was similarly modest. Remarkably, the wholesale & retail sector was the only one to see a noticeable uptick as several firms mentioned offering discounts to attract sales while economic activity improved.

Eventually, output expectations dipped to a four-month low in October, yet they remained among the strongest since early 2023.

Meanwhile, exactly 20 percent of survey respondents forecasted an increase in activity by October next year, while the rest maintained a neutral outlook for the private sector.

• A Tell Media / KNA report / By Michael Omondi