Jobs dip for first time in 16 months as Kenya's private sector contracts for three months

A teller dispenses Kenyan shilling banknotes. (Photo: File)

By Alfred Onyango
Thursday, June 4, 2026

The downturn comes amid a broader contraction in private sector activity, which has now declined for three consecutive months.

Kenya’s private sector has recorded its first decline in employment since the start of 2025, signalling renewed strain in the labour market as firms respond to weakening business conditions and rising costs.

The latest Purchasing Managers’ Index (PMI) by Stanbic Bank shows that job cuts emerged in May, the month under review, breaking a months-long trend of stable or expanding employment.

The fall largely affected temporary staff, where contracts were cut short.

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Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.

Firms reported sharper declines in both output and new sales during the month, with weakening demand conditions linked to constrained customer budgets and rising cost pressures.

The slowdown in new orders directly contributed to reduced hiring and lower levels of input purchasing across the sector.

At the same time, businesses faced the steepest rise in input cost inflation since November 2023, driven by higher purchase prices, while output charges also increased at the fastest rate in two-and-a-half years.

At the sector level, construction and services firms recorded downturns in both output and new orders.

Meanwhile, manufacturing companies were alone in seeing growth in production as declines were recorded elsewhere.

Budget constraints at companies also hampered input buying, which contracted for the first time in eight months.

Subsequently, firms eased efforts to stockpile inputs, as inventories were broadly unchanged on the month despite a further improvement in vendor performance.

Wage bills continued to increase, but at only a fractional pace.

Looking ahead, Kenyan firms were more confident in the outlook for output over the coming year. Optimism is underpinned by increased advertising, planned investment in product diversification and expanding online presence.

Expectations for activity were the strongest since February 2023, with confidence broad based by sector.