Uganda’s private sector accelerated at the start of the second quarter, with the headline purchasing managers’ index rising to its highest reading in five months — even as the Bank of Uganda’s broader business tendency survey signalled that underlying momentum may be losing some of its earlier edge.
The Stanbic Bank Uganda PMI climbed to 55 in April, up from 54.3 in March, marking a fifteenth consecutive monthly improvement in business conditions. Output and new orders both grew for the fifteenth month running, driven by what survey respondents described as strong demand conditions and new client wins from advertising campaigns. Delivery times improved despite rising fuel costs, and backlogs accumulated for a third straight month, indicating that demand continued to outpace capacity additions.
The Bank of Uganda’s Business Tendency Indicators, covering April, told a more mixed story. The overall BTI index eased to 55.8 — its lowest since January — from 58 in March and 59.4 in February, continuing a gradual drift from the strong readings recorded at the turn of the year. The present business situation index slipped to 54.6 from 56.2, and the forward-looking three-month outlook index fell to 57.8 from 60.2, pointing to some cooling in business confidence even as actual activity held up.
On costs, both surveys recorded rising price pressures, but with an important qualification: the PMI found wage bills broadly stable, with higher fuel and transportation costs responsible for most of the inflation. Purchase prices rose across all monitored sectors. Meanwhile, the BTI’s average selling price index continued to climb, reaching 58.4 in April, the highest level in three and a half years, as firms passed on their increased input costs to customers. Services firms were the exception in the PMI, recording a drop in output charges despite facing higher purchase costs.
Christopher Legilisho, economist at Stanbic Bank, said demand conditions held firm “despite the impact of the war in Iran on domestic operating conditions and higher prices alongside.” He added that firms were optimistic about the outlook on account of planned investments, sustained customer demand and expectations that fuel prices would eventually ease.
Employment continued to grow, with firms in the PMI survey mostly hiring casual workers to meet business requirements. The BTI’s expected employment index rose to 56.8, its strongest reading in more than a year. Access to credit edged up to 45.6, continuing the gradual recovery from the lows of early 2025, though it remained well below the neutral threshold of 50.
The sector picture, as captured by the BTI, was divergent. Financial services dominated, with its overall index surging to 83.5 in April — the highest since its addition to the survey in September 2022 — driven by a present business situation index of 77.2 and a future demand index of 86.7, pointing to exceptional confidence in the sector. Agriculture also strengthened, with its index rising to 61, supported by a present business situation reading of 69.8 and robust employment intentions.
Manufacturing, by contrast, weakened, its BTI index falling to 53.9 from 57.2 in March, with order books slipping to 45.5, below the 50 threshold, for the first time since June 2025. Other services retreated sharply, from 59.9 to 54, as current demand fell back to 48.7 — its first sub-50 reading in 11 months. Wholesale trade edged up to 52.7 from 50.8, a modest recovery but still well below the levels seen at the start of the year. Construction remained in contraction territory at 44.6, though order volumes with suppliers ticked up to 59.5, offering a tentative sign that new pipeline activity may be building.
The divergence between a firming PMI and a softening BTI is not necessarily contradictory; the PMI captures month-on-month directional change, while the BTI measures the level of business conditions.
Together, the two surveys suggest that the economy is still growing solidly, but the broad-based optimism of late 2025 has given way to a more cautious, sector-dependent mood, with fuel costs, geopolitical shocks and tight credit conditions acting as constraints on expansion.
