Market News

NAIROBI, June 5 (Reuters) – Kenya’s private sector activity contracted in May for the first time in seven months, hurt by a slowing performance in the construction, wholesale and retail and services sectors, a business survey showed on Thursday.

The Stanbic Bank Kenya Purchasing Managers’ Index fell to 49.6 in May from 52.0 a month earlier. Readings above 50.0 indicate growth in business activity, while those below that signal contraction.

“Total business output contracted at the fastest rate in 10 months in May, although the overall downturn was only slight,” Stanbic Bank Kenya said in comments accompanying the survey.

“Declines were generally driven by the construction, wholesale and retail and services sectors, whereas output increased in agriculture and manufacturing.”

Business expectations for the next 12 months were subdued in May, falling to their second-lowest level on record. Just 4% of surveyed firms expect improved performance in the period, the survey said.

“Consumers remain hesitant to spend due to concerns about their economic state and the dim outlook,” Christopher Legilisho, an economist at Stanbic Bank, said.

Kenya’s inflation fell to 3.8% year-on-year in May from 4.1% a month earlier, data from the statistics office showed.

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The economy expanded by 4.7% last year, down from 5.7% in the previous year. The finance ministry forecasts growth of 5.3% in 2025.

(Reporting by George Obulutsa; Editing by Hugh Lawson)