Kenyan firms ended 2025 with the strongest hiring performance in more than six years, as sustained demand pushed companies to expand employment at a pace last seen before the Covid-19 pandemic.
Private sector employment expanded in December at the fastest rate since November 2019, according to the Stanbic Bank Kenya Purchasing Managers Index (PMI), reflecting continued improvement in business conditions.
The employment acceleration followed renewed hiring in November, when firms resumed recruitment after a near freeze in October, thereby lifting staff numbers at a time when businesses were bracing for the cyclical, heightened festive-linked activity.
“Amid sharply increasing new business, firms in Kenya added to their workforces at a historically strong pace in December… Strong growth momentum led companies to expand their employment levels at the fastest rate since November 2019” Stanbic said in its latest release.
“Job creation was widespread across sectors, but easily the most pronounced in construction,” it added.
Last month, the headline PMI eased slightly to 53.7 from November's four-year high of 55.0, but remained firmly above the 50-point mark signalling continued expansion in private sector activity.
A reading above 50 signifies an improvement in private sector activity compared to the previous month.
Survey data showed employment growth across most monitored sectors, with construction recording the strongest increase as firms expanded capacity to meet ongoing project demand.
The PMI report showed that job creation was widespread, suggesting that firms across agriculture, manufacturing, services, wholesale, and retail sectors added staff as activity levels remained elevated.
The hiring gains coincided with a further reduction in outstanding work, as backlogs of orders fell for the seventh consecutive month in December.
The sustained decline in backlogs indicates that firms are expanding staff capacity faster than new work is accumulating, easing operational pressures seen earlier in the year.
Rising employment followed sharp increases in output and new business, with companies reporting an increase in sales volumes for the fourth month in a row in December.
Affordable prices
Firms attributed higher sales to improved demand conditions, stronger tourism activity, advertising campaigns, and better customer purchasing power across several sectors.
“Panellists highlighted a range of factors leading to higher sales, including advertisements, affordable prices, better cash flow, and increased travel,” reads the report.
Companies also increased the volume of inputs purchased for the third consecutive month, signalling confidence in demand and greater willingness to commit working capital.
The rise in input purchases followed months of subdued growth earlier in 2025, when weak household spending and expensive materials, coupled with the effects of new taxes, kept many firms on the defensive.
The purchasing growth coincided with improved supply chain performance, as supplier delivery times shortened at the fastest rate in more than four years.
Wage costs increased only marginally in December, with most firms reporting unchanged staff pay, limiting immediate cost pressures to expanding payrolls.
The December employment data reinforce signs of gradual labour market improvement after a prolonged period of weak formal job creation.
Earlier surveys showed many firms prioritised job retention in 2025, maintaining headcount through weaker demand to avoid costly rehiring once conditions improved.
As demand recovered in the second half of the year, companies began adding workers cautiously, initially relying on short-term contracts.
The fresh hiring momentum aligns with a separate Central Bank of Kenya (CBK) survey that shows that chief executives expect to increase staffing levels in 2026, supported by easing financial conditions.
The CBK survey, covering chief executives and senior managers at 400 private sector firms, showed that 74 percent of banks and 42 percent of non-bank firms expect to increase staff in 2026.
The hiring optimism is anchored on expectations that economic growth will strengthen in 2026, supported by recovering private sector credit, lower lending rates, and sustained macroeconomic stability.
Lower lending rates and improving private sector credit are expected to support working capital and expansion plans this year.
Executives expect economic growth in 2026 to improve slightly compared with 2025, supported by resilient services, agriculture, and government investment in infrastructure.
According to the PMI, a fifth of surveyed firms expressed confidence for increased output this year, on the back of a raft of factors including business diversification plans, new marketing avenues, improved skills bases, product rebrands, and investment growth.
Firms, however, continue to cite high taxation, fiscal tightening, and delayed government payments as constraints on demand and hiring.
Global uncertainties, including geopolitical tensions and commodity price volatility, also pose risks to business confidence.
