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Private sector steps up hiring despite flat business activity
Employment is a key component of the PMI index, carrying a weight of 20 percent in the composite headline figure, meaning sustained job growth provides a buffer against sharper declines in the overall reading.
Private sector firms in Kenya stepped up hiring in February despite the slowest growth in business activity in six months, an indication that firms may be racing to clear backlogs of previous orders.
The latest Stanbic Bank Kenya Purchasing Managers’ Index (PMI) shows that employment growth accelerated during the month, extending a run of job creation that began in February 2025.
The headline PMI slipped to 50.4 in February, down from 51.9 in January, edging closer to the neutral 50.0 mark that separates expansion from contraction, as new orders rose at the slowest pace in six months and output growth nearly stalled.
“The Kenya PMI dropped for the third month in a row from 51.9 in January to 50.4 in February, indicating only a marginal improvement in the health of the private sector economy. Notably, the upturn was the slowest recorded in the current six-month growth sequence,” wrote Stanbic.
However, beneath the cooling headline figure, firms continued to expand their workforce, with the pace of job creation strengthening compared to January and exceeding the average seen over the past year.
“Job numbers rose at Kenyan businesses, continuing the run of job creation that began in February 2025. Furthermore, the pace of growth accelerated from January and was stronger than the average seen in the aforementioned period,” notes the survey.
According to the PMI report, companies that increased employment attributed the hiring largely to heavier workloads and the commencement of new projects, suggesting that businesses are responding to operational pressures rather than speculative expansion.
“Where employment levels expanded, this was mainly attributed to an increase in workloads and new project starts,” reads the report. Backlogs of work were broadly unchanged in February, ending an eight-month sequence of declining outstanding business, an indication that firms are struggling to clear incoming orders despite slower demand growth.
This helped to sustain hiring growth, with firms taking on additional workforces to lower pressure on staff.
The sustained hiring comes even as overall business conditions cooled for the third consecutive month, with firms citing increased competition and macroeconomic pressures as constraints on growth.
The resilience in hiring aligns with separate findings from a recent Central Bank of Kenya (CBK) CEOs survey, which sheds light on the structure of private sector employment across the country.
The CBK survey, conducted between January 12 and 23, 2026, and targeting chief executives of more than 1,000 private sector firms, found that 89 percent of companies employed fewer than 1,000 workers, with only 10 percent of respondents indicating that their firms have a workforce exceeding 1,000 employees.
The survey findings suggest that active hiring is largely being driven by smaller firms rather than large corporates, a dynamic that has implications for wage growth, job security, and productivity gains.
Employment is a key component of the PMI index, carrying a weight of 20 percent in the composite headline figure, meaning sustained job growth provides a buffer against sharper declines in the overall reading.
February’s hiring momentum was recorded alongside easing inflationary pressures, with staff cost inflation softening to a three-month low and remaining only slightly above the neutral threshold.
The PMI report indicates that business expectations for the next 12 months remain stable, with about 21 percent of surveyed firms expressing optimism about future output, citing anticipated improvements in demand and economic conditions.
However, the majority of firms remained either neutral or cautious about expansion plans in the coming months.
