Uganda’s private sector growth accelerated in February, rebounding from a slower start to the year, according to the latest purchasing managers’ index.
The Stanbic Bank Uganda Purchasing Managers’ Index rose to 54.2, up from 52.6 in January, marking the thirteenth consecutive month of improving business conditions. This was the highest reading since December.
Business activity continued to grow for the thirteenth consecutive month, with companies attributing the expansion to improved customer demand and increased client numbers, S&P Global said. New orders also rose for a thirteenth consecutive month, supported by what firms described as strong demand conditions.
Output and new business increased across all five sectors monitored by the survey for the third month running, following the broad-based pattern established in December and January.
Employment rose in all five sectors in February, with firms citing greater workloads as the primary driver for job creation. The increase in staffing numbers represented a strengthening from January, when only agriculture recorded a decline in headcount.
Despite the hiring surge, companies reported a renewed rise in backlogs as sustained growth in new orders outpaced capacity improvements. This marked a reversal from recent months, when firms had been able to reduce outstanding work.
Both input buying and inventory levels expanded as companies prepared for anticipated increases in output. Stock accumulation has now been recorded for twelve consecutive months, whilst supplier delivery times improved due to intensified competition among vendors, shortening lead times for inputs.
Cost pressures persisted during the month, with overall input costs rising on the back of higher purchase prices and wage bills. Companies cited motivational payments to employees, increased utility charges, and higher prices for materials including medicines, metals, and cement as key drivers of cost inflation. In response, firms raised selling prices.
Christopher Legilisho, economist at Stanbic Bank, said: “While demand conditions have remained sturdy, prices have not come under much pressure. While total input prices, purchase prices, staffing costs and output charges increased, headline inflation moderated to 2.9 per cent year-on-year, according to [the] authorities. This implies that the Bank of Uganda’s restrictive stance by has been effective.”
Read: Bank of Uganda keeps rates on hold as inflation stays tame and growth holds firm
Companies remained optimistic about the outlook for the coming year, S&P Global said, expecting continued strength in client demand and planned investment in advertising campaigns to support positive sentiment.
