Uganda’s private sector growth slows as fuel and transport costs bite

Uganda’s private sector continued to expand in September, but at a slower pace than in August, as rising fuel, transport and utility costs pushed firms to raise prices, according to the latest Stanbic Bank Uganda Purchasing Managers’ Index (PMI).

The headline PMI, compiled by S&P Global, fell to 53.0 in September from 55.0 in August. Readings above 50.0 indicate an improvement in business conditions compared with the previous month, while readings below 50.0 point to a deterioration. According to the survey, the private sector has recorded continuous improvement since February 2025.

Christopher Legilisho, an economist at Stanbic Bank, said the index remained in expansionary territory despite the drop.

“The Stanbic Bank Uganda PMI remained firmly in expansionary territory in September, although the headline reading moderated materially relative to its six- and 12-month trends,” Legilisho said.

“New orders and output remained resilient, consistent with favourable demand conditions, while employment increased across most sectors except services. However, rising backlogs driven by stronger demand and payment delays suggest that firms are facing growing capacity and working capital constraints.”

Output and new orders rose again in September. Firms surveyed attributed the increase in business activity to higher inflows of new orders and to advertising campaigns, and said promotional activity and steady customer demand had brought in new business.

The rise in new orders was recorded across all sectors, but agriculture and wholesale and retail firms reported falls in output.

Firms in all monitored sectors reported higher input costs, linking them mainly to utility, fuel and transport costs, as well as rising wage bills. Businesses passed part of the increase on to customers, raising selling prices in every sector except construction, where prices fell.

“Supply-side pressures nevertheless intensified as higher transport and logistics costs strained supply chains,” Legilisho said. “Firms responded by increasing purchasing activity and building inventories in anticipation of sustained demand, providing a buffer against potential disruptions but also increasing exposure to elevated input costs.”

Companies increased staff numbers in September, with firms reporting both temporary and permanent hires.

Backlogs of work rose for the fourth consecutive month. Some firms said delayed payments had slowed their ability to process incoming work.

Firms also bought more inputs during the month to meet business needs, and some built up stock in expectation of more orders in the coming months. Inventories have now risen for 19 consecutive months.

Supplier delivery times worsened, however, which firms attributed to international transport delays and higher fuel costs.

The survey also found that firms in all monitored sectors were optimistic about the year ahead, with many citing investment in advertising and improvements in product quality.

The Stanbic PMI is based on monthly questionnaire responses from purchasing managers in agriculture, mining, manufacturing, construction, wholesale, retail and services. It is a weighted average of five indices: new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).