Business activity in Uganda’s private sector expanded at its fastest pace in 23 months during May, a private survey showed Thursday, as output driven by stronger client demand rose for the fourth consecutive month.
The Stanbic Bank Uganda Purchasing Managers’ Index recorded a reading of 56.4 during the month, up from 55.3 in April and its highest since July 2023. This is the fourth month in a row that the survey has produced a reading above 50 — the threshold that separates expansion from contraction.
The S&P Global survey found that companies output and new business increased due to stronger client demand and new customer acquisition.
“Robust new orders and output were attributed to increased sales and strong customer demand across all monitored sectors,” said Christopher Legilisho, an economist at Stanbic Bank. “Ugandan firms increased staffing levels for a fourth month, both part-time and full-time, due to increased output. Staffing costs ticked up as some companies paid bonuses to motivate workers,” he added.
However, the survey showed that input prices continued to rise. Panellists attributed this to higher prices for materials, particularly cement, food and fuel, as well as to staff costs. This prompted them to raise selling prices again, although only the services and agriculture sectors reported doing so.
“Despite the cost increases, firms remained optimistic about business conditions, expecting growth in customer demand and output over the next 12 months,” said Mr Legilisho.
However, other data produced by the central bank indicated a slight decline in business sentiment. The bank’s overall Business Tendency Indicator fell from 59.44 in April to 59.2 in May. All but one of its key indicators slowed down, with access to credit being the only one to register an increase, reaching its highest level in nine months.
The Stanbic Bank Uganda PMI is compiled by S&P Global from responses to questionnaires sent to around 400 purchasing managers in private sector companies. This panel is stratified by detailed sector and company workforce size, based on contributions to GDP.
