Uganda’s private sector expands for seventh consecutive month

Kampala, Uganda – Uganda’s private sector has sustained its growth momentum for the seventh month in a row, according to the latest Stanbic Purchasing Managers’ Index (PMI) data.

The PMI for October recorded a value of 52.9, slightly down from September’s 54.2, yet still indicating positive growth in business conditions. This expansion is attributed to increased demand, prompting firms to ramp up their output and hire additional staff.

“The latest PMI data for Uganda indicated a sustained expansion in the Ugandan private sector,” said Mulalo Madula, Senior Analyst at Stanbic Bank. “The persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined.”

Business activity and new orders continued to rise, driven by greater spending on advertising and enhancements in product quality, contributing to buoyant demand conditions across various sectors.

Firms reported a rise in both purchase and staff costs, leading to higher overall input prices. However, the ability to pass these costs onto consumers resulted in increased selling prices. This trend suggests a healthy demand environment, as all five monitored sectors experienced a rise in expenses.

Higher wage bills and raw material costs were significant factors driving inflation. Despite these challenges, businesses remain optimistic about future growth, with planned advertising spending and expectations of continued demand.

“The October PMI results underscore the resilience of the Ugandan economy, with businesses benefiting from buoyant demand,” Madula added. “The sustained increase in output is encouraging, and firms are optimistic about future growth, bolstered by planned advertising spending and expectations of continued demand.”

The Stanbic PMI is compiled by S&P Global from responses to questionnaires sent to about 400 purchasing managers. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail, and services.

The PMI is a weighted average of the following five indices: New Orders, Output, Employment, Suppliers’ Delivery Times, and Stocks of Purchases.

The data underscores the resilience of the Ugandan economy, with the PMI results indicating that the private sector is likely to maintain its growth trajectory in the coming months. As firms navigate the challenges of rising costs, their ability to adapt and respond to market demands will be crucial in sustaining this upward momentum.