An important gauge of private sector activity in Uganda strengthened in April, mainly on increasing customer numbers, pointing to the economy’s continued recovery from the coronavirus pandemic and election-related uncertainty.
The Stanbic Bank Uganda purchasing managers’ index for the private sector rose to 57.8 last month, its highest in fifteen months, from 53.2 in March. It was also the third straight reading above the 50 level, which indicates an increase of activity.
“Business conditions have consistently improved since February, supporting our view that economic recovery is well underway,” Stanbic Bank’s economist for Africa regions, Ferishka Bharuth, said.
The strengthening in the index, which is compiled from a monthly survey of managers in 400 private sector companies, was mainly due to an increase in customer numbers “amid more normal operating conditions”, leading to an increase in new orders and production across the five sectors it covers.
“Firms responded to higher new orders by taking on extra staff, the third successive month in which this has been the case,” said the survey report. Purchasing activity also increased as businesses stocked up on production inputs.
However, export orders “remain[ed] weak, indicating that the impact of the pandemic weighs on external demand conditions,” Ms Bharuth said. Input costs also went up, with the report singling out an increase in the prices of items such as cement and paper, staff costs, and prices for electricity and fuel.
The survey is conducted by IHS Markit, the international research firm.
