In February, Uganda’s private sector continued to exhibit resilience, marking its 19th consecutive month of expansion, albeit with a slight easing in activity across certain sectors. According to the latest Stanbic Purchasing Managers’ Index (PMI) released by S&P Global, the headline figure dropped to 51.7 from January’s 54.0, indicating a moderation in growth.
The Stanbic PMI, a comprehensive survey involving approximately 400 respondents spanning agriculture, mining, manufacturing, construction, wholesale, retail, and services, serves as a barometer for economic health. The index comprises five key indices, including New Orders, Output, Employment, Suppliers’ Delivery Times, and Stocks of Purchases. Readings above 50.0 signal improvement, while those below 50.0 denote deterioration.
Christopher Legilisho, Economist at Stanbic Bank, noted, “Despite a slight softening of private sector activity in February, Uganda has sustained a streak of strong activity, with both output and new orders increasing over the last 19 months due to higher customer demand.”
The report highlights growth in multiple sectors, including construction, industry, services, and wholesale and retail. However, agriculture recorded a decline in output during the period under review.
Legilisho further added, “Activity in agriculture declined in February. Still, backlogs eased, particularly in agriculture, with firms increasing staffing levels for 11 months running, albeit only slightly in February, as well as hiring permanent staff to handle overflow.”
Employment continued to rise, reflecting efforts by firms to manage backlogs of work. Despite variations across sectors, job creation persisted in industry, services, and wholesale and retail, while agriculture and construction witnessed falling staffing levels.
The optimism regarding future prospects remains robust, with approximately 83% of respondents expressing positivity in the 12-month outlook for activity. This optimism stems from an anticipated increase in customer numbers, supporting projections of continued growth in output.
However, challenges persist, with input costs rising due to higher prices for fuel, materials, and utilities. Consequently, companies adjusted their selling prices upward to offset these increased costs, marking the 11th consecutive month of charge inflation.
While companies increased purchasing activity, stocks of inputs decreased for the first time in three months, indicating a cautious approach amidst signs of softening client demand. Nonetheless, efforts to deplete backlogs of work were generally successful, with outstanding business decreasing for the second successive month.
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