Hiring Stalls Despite Surge in Kenya’s Private Sector Growth

Kenya, 6 November 2025 - Kenya’s private sector recorded its strongest business activity in nearly four years this October, but the boom hasn’t yet translated into new jobs, raising tough questions about whether growth is delivering for ordinary Kenyans.

The Stanbic Bank Kenya Purchasing Managers’ Index (PMI), compiled by S&P Global, climbed to 52.5 in October, up from 51.9 in September, its highest reading since February 2022.

A score above 50 indicates expansion in business conditions.

Yet, despite the improved output and new orders, employment levels were flat, with 97% of firms reporting no change in staffing.

“Kenya’s private sector in October saw both output and new orders up sharply as conditions improved for consumers and firms benefited from softer inflation,” said Christopher Legilisho, Economist at Standard Bank.

“However, firms were less optimistic about future output conditions. Employment was stable in October for most firms as they maintained their workforce.”

Why This Matters

For job seekers, the disconnect between growth and hiring highlights an uncomfortable truth: Kenya’s recovery may be gaining momentum on paper, but it’s not yet inclusive.

Employment growth has long been a key test for economic resilience, particularly in a country where over one million young people enter the labour market annually.

Without corresponding job creation, rising business activity risks deepening inequality rather than alleviating it.

The Numbers

1. PMI: 52.5 (October), up from 51.9 (September), indicating the fastest improvement since early 2022.
2. New Orders & Output: Strongest increases in 20 months, reflecting better consumer demand and reduced price pressures.
3. Employment: 97% of firms reported unchanged staffing levels.
4. Sector Highlights: Manufacturing & Retail saw stronger sales volumes, Services expanded on renewed consumer spending, and Construction lagged, continuing to signal weak demand.
5. Inflation: Input costs fell to a 13-month low, but firms remain cautious about margins.

Behind the Hiring Freeze

Analysts say the job stagnation stems from caution, cost pressures, and productivity adjustments rather than lack of demand.

Many companies opted to redeploy existing staff, increase overtime, and clear order backlogs instead of hiring.

The caution reflects uncertainty about policy stability, higher taxes, and weak spending power among consumers.

“Low price pressures imply that while output conditions have improved, they are not fueling demand-driven inflation,” noted Legilisho, adding that firms continue to prioritise cost containment.

Even with improved sales, firms are wary of expanding their wage bills amid elevated fuel prices, VAT adjustments, and credit constraints.

Sector Breakdown

The manufacturing sector posted a strong rebound thanks to better raw material availability and supplier deliveries.

Wholesale and retail firms used discounting strategies to boost sales, while services benefited from a gradual return in household spending.

However, construction, traditionally a major employer, remained weak, with ongoing infrastructure slowdowns and higher import costs curbing growth.

The sector’s underperformance continues to drag on labour absorption, particularly for lower-skilled workers.

Regional Outlook

Kenya’s October PMI contrasts sharply with its neighbours:

1. Nigeria’s PMI rose to 54.0, showing faster growth led by manufacturing and new orders.

“Business activity continued to expand strongly, supported by improving domestic demand,” said Muyiwa Oni, Head of Equity Research at Stanbic IBTC.

1. Uganda maintained modest growth at 51.2, reflecting stable orders but subdued exports.
2. South Africa, by contrast, slipped below 50, showing contraction amid energy constraints and weak consumer spending.

Kenya’s position, growth without jobs, signals early-stage recovery but also the risk of a “jobless rebound” if private sector confidence does not translate into sustained hiring.

Policy and Future Outlook

Economists argue that Kenya must link productivity growth to employment by investing in labour-intensive sectors and creating incentives for firms to scale.

“The private sector rebound is encouraging, but employment remains the missing link,” said Anthony Muthiora, economist at the Kenya Private Sector Alliance (KEPSA).

“Without a deliberate focus on job creation, output growth alone will not reduce household stress or youth unemployment.”

Kenya’s National Treasury projects GDP growth of 5.4% in 2025, but converting that growth into jobs will depend on tax policy clarity, credit availability, and cost management.

As the year closes, firms are hoping for strong festive-season sales to justify new hiring.

But unless confidence improves, Kenya’s impressive growth streak could remain a story of busy factories, but idle workers.