The Markit Stanbic Bank Kenya Purchasing Managers' Index (PMI) fell to 50.6 in July from 51.0 the previous month. The 50.0 mark separates growth from contraction.
"Domestic demand improved by the second slowest pace since the lifting of public health restrictions after the first wave of pandemic," said Kuria Kamau, fixed income and currency strategist at Stanbic Bank.
The East African nation emerged from prolonged lockdown measures in October last year, giving the economy a boost, but it has since been forced into several, partial lockdown measures by new waves of infections.
"The 12-month outlook by firms rose to its highest level in five months but remains below its long-term average," Kamau said.
The finance ministry expects growth to surge to 6.6% this year, recovering from 0.6% in 2020, when sectors such as tourism and related services collapsed due to restrictions imposed to curb the spread of COVID-19.
(Reporting by Duncan Miriri; Editing by Hugh Lawson)