A growing number of companies in Kenya’s manufacturing and services sectors have laid off full-time workers over the past three months, blaming weak demand and falling sales, further deepening the crisis in the country’s labour market.

According to a Central Bank of Kenya (CBK) survey targeting over 1,000 chief executive officers, 23.5 percent of manufacturing firms and 23.9 percent of service sector firms—including those in hospitality, had reduced the number of full-time employees by June 2025 compared to March.

Only 11.8 percent of manufacturers and 10.9 percent of service firms increased their number of full-time employees during the same period.

The report reveals that the majority of firms—64.7 percent in manufacturing and 65.2 percent in services chose to maintain their existing workforce, pointing to a cautious hiring approach amid uncertain business conditions. The decision by many companies to keep staffing levels unchanged reflects concerns about future demand and the overall health of the economy.

The latest findings come as firms grapple with declining sales. The CBK survey shows that 41.2 percent of manufacturing companies recorded lower sales between March and June, while 52.9 percent experienced growth.

In the services sector, 38 percent reported a decline in sales, 35.9 percent recorded increased sales, and 26.1 percent said sales remained the same.

As demand dropped, firms responded by scaling back production, with 47.1 percent of manufacturers cutting production volumes—leading to reduced need for labour. The shedding of jobs is directly tied to this trend, revealing the connection between weaker sales performance and labour reductions.

The CBK survey, which captures views from senior leaders in private sector organisations such as the Kenya Association of Manufacturers, Kenya National Chamber of Commerce and Industry, and the Kenya Private Sector Alliance, paints a grim picture for job seekers and workers.

It shows that even as some firms experience pockets of growth, many are choosing not to hire or are actively downsizing due to cost pressures and demand shifts.

This trend adds pressure to Kenya’s labour market, which already saw a drop in new jobs created last year. According to Kenya National Bureau of Statistics data, 782,300 new jobs were created last year—down from 848,100 in the previous year—with 90 percent of those jobs located in the informal sector.