Uganda’s private sector closed the first quarter on a firm footing, extending a fourteen-month run of expansion in March, though rising fuel costs and weaker wholesale trade signalled emerging strains.
The Stanbic Bank Uganda Purchasing Managers’ Index rose marginally to 54.3 in March, from 54.2 in February, remaining well above the 50.0 threshold separating expansion from contraction. Data compiled by S&P Global showed output and new orders expanding for a thirteenth consecutive month, supported by stronger client purchasing power and higher customer numbers. Firms also reported rising backlogs of work and continued inventory building, even as supplier delivery times lengthened.
The Bank of Uganda’s Business Tendency Indicators pointed in the same direction but with some loss of momentum. The overall BTI index eased to 57.8 in March from 59.4 in February, remaining firmly in expansionary territory. Unlike the PMI, the BTI captures a broader range of conditions, including credit access and sector-level sentiment.
Both surveys pointed to continued employment growth. The PMI showed hiring across all sectors for a second consecutive month, largely through temporary positions to support capacity. BTI data showed current employment steady at 51.3, while expectations for the next three months rose to 55.7, the strongest since mid-2024.
Cost pressures intensified, driven primarily by fuel and utilities. PMI respondents reported a further rise in input prices, with firms continuing to pass these through to customers; output charges have now increased for more than eighteen months. The BTI’s average selling price index rose to 56.8, its highest this year.
Christopher Legilisho, economist at Stanbic Bank, said higher input costs reflected increases in fuel, utilities and some raw materials, including timber.
Despite these pressures, headline inflation remained subdued. Data from the Uganda Bureau of Statistics showed consumer prices rising 2.8 per cent year-on-year in March, down from 2.9 per cent in February, suggesting limited pass-through to the broader economy.
Sectoral data pointed to uneven momentum. Financial services remained the strongest segment, with a BTI reading of 74.0 and a future demand index of 80.0, indicating robust demand for credit and related products.
Manufacturing held steady at 57.6, supported by solid current business conditions. By contrast, construction continued to lag, with its index falling to 43.4 — the third consecutive month below 50 — and the weakest order books reading in the survey at 35.3.
Wholesale trade also softened, with its BTI index slipping to 50.1 from 54.5 in February, reflecting weaker business conditions and forward orders.
Firms remained broadly optimistic over the coming year. PMI respondents continued to build inventories, citing expectations of sustained demand and easing cost pressures. The BTI’s business conditions index for the next three months held at 59.9, while the services future demand index rose to 70.5.
The data point to an economy in steady health at the end of the first quarter, with private sector activity expanding and hiring sustained. Rising fuel costs and continued weakness in construction and wholesale trade, however, suggest the expansion remains uneven as the second quarter begins.
