Overview:

Key findings
Output and new orders rise for second month running
Higher purchase and staff costs push up total expenses
Employment expands further amid confidence in the outlook

KAMPALA, UGANDA – The Ugandan private sector experienced a significant increase in business activity and optimism in May, according to the latest Stanbic Purchasing Managers Index (PMI). The headline PMI rose to 54.1 from 52.6 in April, indicating a further improvement in performance.

“May produced a second successive month of buoyant private sector activity in Uganda. Output and new orders gained from robust consumer demand, referrals, and newly acquired clients. Almost all sectors recorded growth except for agriculture,” said Christopher Legilisho, Economist at Stanbic Bank.

The increase in business activity was driven by robust consumer demand, referrals, and newly acquired clients, leading to a rise in output and new orders. Employment also expanded for the fourteenth month, with firms increasing staffing levels to meet growing demand.

“Ugandan firms increased staffing levels for a fourteenth month now, including both part-time and full-time workers due to increased output. Staffing costs also ticked up as some companies paid bonuses to motivate workers,” Legilisho added.

Despite increasing inflationary pressures, firms remain upbeat about the outlook for customer demand and output over the next 12 months. “Firms increased output prices due to favourable demand conditions with input prices and purchase prices rising as operating expenses increased, with costs connected to raw materials and utilities remaining high. This implies increasing inflationary pressures. Still, firms remain upbeat on the outlook for customer demand and output over the next 12 months,” Legilisho said.

The survey also found that confidence in the outlook encouraged firms to expand their workforce numbers and input buying. “Further, greater employment allowed firms to handle outstanding work, thereby further clearing backlogs during May. Purchasing activity expanded, with inventories growing in May due to higher input buying and faster delivery times by firms,” Legilisho noted.