Private Sector Growth Slows in February as Agriculture and Manufacturing Weaken
By Chemtai Kirui | Nairobi | March 4, 2026
Private sector activity expanded for a fifth consecutive month in February, but growth slowed sharply as agriculture and manufacturing lost momentum, according to the latest Stanbic Bank Purchasing Managers’ Index (PMI).
The index eased to 50.4 in February from 51.9 in January. While readings above 50 signal expansion, the drop indicates softer output and weaker demand conditions across the economy.
“While the outcome was still expansionary, some businesses were hampered by increased competition and a doubtful economy,” said Stanbic Bank economist Christopher Legilisho, reflecting caution among firms despite relatively stable macroeconomic conditions.
Legilisho said that although macroeconomic indicators such as inflation have improved, the broader economy has yet to transmit those gains fully to businesses, with sections of the private sector continuing to feel strain.
Agriculture and manufacturing — key employers and major contributors to export earnings — were the weakest performers in February. Their softer output offset gains recorded in construction, wholesale and retail, and services.
The slowdown in farming activity comes amid concerns over underinvestment and weather-related pressures. Manufacturing firms cited stiff competition and supply chain constraints.
Because agriculture shapes food supply and rural incomes, and manufacturing underpins industrialisation and value addition, weakness in both sectors raises questions about the durability of the recovery.
Separate data from the Kenya National Bureau of Statistics showed inflation slowed slightly to 4.3% in February from 4.4% in January, suggesting price pressures remain contained.
The Central Bank of Kenya has eased monetary policy in recent months to stimulate lending and support private investment. The softer PMI reading may reinforce arguments for continued policy support if demand conditions weaken further.
The National Treasury projects economic growth of 5.3% in 2026, up from roughly 5.0% last year, citing easing inflation and stronger agricultural output.
However, the World Bank last week projected 4.9% growth, citing fiscal pressures and external vulnerabilities — a more cautious outlook than the government’s forecast.
The PMI survey — based on responses from around 400 firms — tracks output, new orders, employment and supplier delivery times. In February, new orders expanded at a slower pace, and businesses reported weaker demand compared with the start of the year.
Confidence remains positive but guarded. Firms cited global uncertainty and domestic cost pressures as ongoing concerns.
Investor sentiment reflects that ambivalence. Data from the Nairobi Securities Exchange showed foreign investors withdrew approximately Sh3.8 billion in February, even as domestic investors supported local indices.
Agriculture is also under parliamentary scrutiny. A recent review of the 2026 Budget Policy Statement raised concerns that allocations for fertiliser subsidies and livestock programmes may be insufficient to drive productivity gains.
If investment in core sectors lags, private sector expansion could become increasingly uneven.
The February reading does not signal contraction, but it does suggest that growth is losing breadth. For policymakers, the challenge will be ensuring momentum in services and construction is matched by stronger output in agriculture and manufacturing.
The next PMI releases will help determine whether February’s slowdown represents a temporary pause — or an early indication of broader cooling in business activity.
