Uganda’s private sector maintained its expansion in January, extending a run of consecutive monthly growth to a full year, according to the latest purchasing managers’ index.
The Stanbic Bank Uganda Purchasing Managers’ Index fell to 52.6 in January, down from 54.0 the previous month, but remained above the 50-point threshold that separates expansion from contraction. The reading marked the twelfth consecutive month of improving business conditions.
Growth in new orders and business activity continued for a twelfth straight month, supported by rising customer numbers, S&P Global said. However, some companies reported that operations were hampered during the election period.
Output increased across all five of the sectors monitored by the survey, with firms responding to stronger demand by hiring more staff. Employment rose for the twelfth month running, with many companies reporting that new hires were permanent. Agriculture was the only sector to record a reduction in staffing levels.
The increase in workforce numbers led to higher staff costs, with wage inflation resuming after declining in December. Improvements in capacity meant that companies were able to reduce their backlogs of work for the third time in four months.
Both input buying and inventory levels rose as firms prepared for anticipated increases in output, although there were some reports of growing caution around stock holdings. Supplier delivery times lengthened for the third consecutive month, with delays attributed to the election period.
Overall input costs increased, driven by rising purchase prices, staff costs, and utility charges. In response, firms raised output prices, although the vast majority of respondents — 97 per cent — reported no change in either input or output prices since December.
Companies remained optimistic about the outlook for the year ahead, with around three-quarters of survey participants expressing positive sentiment in January. This confidence reflected expected improvements in customer demand, with some firms also predicting increased activity following the election period.
