Stronger customer demand drove up new orders for Ugandan companies last month, and helped to mitigate the effects of a border dispute with Rwanda as business activity rose to a three-month high, a survey showed.
Business conditions in the private sector rose at their fastest rate in three months, bouncing back from two consecutive monthly declines in February and March, according to figures from the Stanbic Bank Uganda Purchasing Managers’ Index.
The headline index measuring overall business activity was 54.7, up from 51.7 in March, well above the 50 mark that separates expansion from contraction. The survey is produced by IHS Markit, the global research company.
An improvement in customer demand leading to a rise in new business and output, as a result, drove the increase, the survey showed. This helped offset the effects of the ongoing border crisis with Rwanda, which was blamed for the fall in new export orders.
Still, respondents reported increases in work from other sources, “perhaps due to other markets such as South Sudan increasing demand for Uganda’s exports,” according to Jibran Qureishi, the regional economist for East Africa at Stanbic Bank.
“This diversity in Uganda’s trade mix should underpin its resilience,” Mr Qureishi added.
Companies across all the five surveyed sectors also took on extra staff to manage the bigger workloads in April, continuing a 35-month trend of rising employment.
However, costs continued increasing due to higher purchase prices and employee costs. This was mainly due to a rise in prices for baking powder, cement, maize, and stationery. Electricity and water bills also went up.
Despite the rise in input prices, purchasing activity rose for the fourteenth consecutive month on the back of positive demand forecasts to support an increase in inventory.
The PMI surveys companies in the agriculture, construction, industry, services, and wholesale and retail sectors. It measures companies’ orders, production, employment levels, and deliveries to gauge their condition.