In January, the Ugandan private sector experienced contrasting economic trends as purchase prices rose due to increased costs for construction materials and food products. However, staff costs witnessed a decline for the first time in nearly 17 months, reflecting in the Stanbic Purchasing Managers’ Index (PMI) slipping from 54.8 in December to 54.0.
The Stanbic Bank PMI, compiled by S&P Global, encompasses responses from purchasing managers across a panel of approximately 400 private sector companies in various industries, including agriculture, mining, manufacturing, construction, wholesale, retail, and services. This comprehensive survey, initiated in June 2016, yields a weighted average based on five key indices: New Orders, Output, Employment, Suppliers’ Delivery Times, and Stocks of Purchases.
Economist Christopher Legilisho of Stanbic Bank noted the continued positive trend in Uganda’s PMI outcomes, indicating a 15-month growth streak in private-sector activity. Over the past 18 months, output and new orders have surged, driven by an increase in customer numbers across sectors like agriculture, construction, industry, services, wholesale, and retail. Despite marginal increases in hiring, companies employed temporary staff to manage overflow, leading to backlogs, particularly in agriculture.
The survey highlighted a positive impact on the private sector from rising customer numbers, correlating with increased output and new orders, observed on a monthly basis for the past year-and-a-half. Sector-specific data revealed heightened activity in agriculture, construction, industry, services, wholesale, and retail.
The expansion of new business in the Ugandan private sector was supported by a renewed increase in new export orders, marking the first rise in three months and the strongest since mid-2023.
Efforts to handle increased workloads resulted in some firms hiring temporary workers, contributing to a marginal increase in employment and a reduction in backlogs in January. Improving customer demand translated into increased purchasing activity and stocks inputs, with suppliers responding well to requests for faster deliveries.
Higher purchase prices were recorded in January, primarily due to increased costs for construction materials and food products. Conversely, staff costs decreased for the first time in 17 months. Despite overall input cost increases, companies raised their selling prices in January.
Business sentiment remained positive at the start of 2024, with companies anticipating a continued rise in customer numbers over the next year, fostering expansions in output. Over 82% of respondents predicted an increase in activity over the next 12 months.
