A gauge of business conditions in Uganda’s private sector expanded at a solid pace in June, though weaker than the prior month, as new orders and output continued to strengthen, according to a closely watched survey.
The Stanbic Bank Uganda Purchasing Managers’ Index edged down to 55.6 in June from 56.4 in May, although most indices remained robust, data provider S&P Global said Thursday. A reading above 50 indicates that overall activity continued to expand, and June’s increase was the fifth consecutive rise.
Private sector companies reported an increase in output and new business across all sectors, S&P Global said. “Ugandan firms noted that demand conditions remained favourable, with new client wins also helping drive the upturn,” according to the report.
“Employment also expanded in June due to positive business growth foreseen over the coming months. This was further reflected by increases in purchasing as well as higher inventories,” said Christopher Legilisho, an economist at Stanbic Bank.
“We therefore infer that GDP growth will prove strong in 2025 due to positive aggregate demand across most sectors,” Mr Legilisho added.
Notably, the survey showed that output prices remained stable in June, despite rising input costs driven by higher wages, fuel, and material expenses. Construction firms were the only ones to report an easing in price pressures, while output price increases were only seen in the agriculture and wholesale and retail sectors.
“Encouragingly, the long-term trends imply subdued inflation because of appropriate monetary conditions, an appreciating shilling, and deflation in energy prices. Indeed, headline inflation came to just 3.9 per cent year on year (0.1 per cent on the month) in June, from 3.8 per cent year on year (0.5 per cent month on month) in May,” said Mr Legilisho.
The PMI is widely regarded as a more timely indicator of economic activity than official statistics. The index is calculated using a weighted average of five sub-indices: new orders, output, employment, suppliers’ delivery times and stocks of purchases. The survey is conducted in the second half of each month and indicates changes in direction compared to the previous month.
