Consumer demand keeps Uganda’s private sector growing in September, Stanbic PMI shows

Uganda’s private sector continued to expand in September, supported by sustained consumer demand and an increase in new orders, although rising fuel, transport and other operating costs put businesses under growing pressure.

The Stanbic Bank Uganda Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 53.0 in September from 55.0 in August.

Despite the slowdown, the reading remained above the 50.0 mark, which indicates an improvement in business conditions from the previous month.

The September reading also extended the period of expansion in Uganda’s private sector that began in February 2025.

Businesses reported that sustained customer demand, advertising campaigns and efforts to improve product quality helped drive new sales during the month.

Christopher Legilisho, an Economist at Stanbic Bank, said the private sector remained firmly in expansion despite the slower pace of growth.

“The Stanbic Bank Uganda PMI remained firmly in expansionary territory in September, although the headline reading moderated materially relative to its six-and 12-month trends,” Legilisho said.

He said new orders and output remained resilient, reflecting favourable demand conditions, while employment increased in most sectors.

However, he warned that growing backlogs, partly caused by stronger demand and delayed payments, were creating pressure on businesses’ capacity and working capital.

The PMI survey is based on responses from purchasing managers at private-sector companies. It covers agriculture, mining, manufacturing, construction, wholesale, retail and services. The survey provides an early indication of changes in business conditions in the economy.

The PMI is calculated using five main indicators: new orders, output, employment, suppliers’ delivery times and stocks of purchases.

New orders increased across the sectors monitored by the survey in September. However, output declined among agriculture and wholesale and retail businesses.

Companies that recorded increased business activity linked the improvement to stronger inflows of new orders and successful advertising campaigns.

Businesses also reported that promotional activities helped attract customer interest and contributed to higher sales towards the end of the third quarter.

At the same time, firms faced increasing costs.

Higher utility, fuel and transport costs were among the main factors pushing up operating expenses. Businesses also reported increases in wage bills.

Overall input costs increased across all five broad sectors covered by the survey.

As costs rose, companies attempted to pass some of the additional expenses on to consumers by increasing their selling prices.

Output charges increased across all sectors except construction, where selling prices fell.

Legilisho said supply-side pressures had also intensified as higher transport and logistics costs disrupted supply chains.

“Firms responded by increasing purchasing activity and building inventories in anticipation of sustained demand, providing a buffer against potential disruptions but also increasing exposure to elevated input costs,” he said.

The increase in business activity also encouraged companies to hire more workers in September.

The survey found that employment increased across most sectors, with businesses taking on both temporary and permanent workers to meet growing demand.

However, the increase in new orders also placed pressure on companies’ ability to complete work on time.

Backlogs of work increased for the fourth consecutive month, with some businesses reporting that delayed payments affected their ability to process incoming orders.

Businesses also increased their purchases of inputs during September to meet higher production and sales requirements.

Some firms increased their stocks because they expected demand and new orders to remain strong in the coming months.

Inventories of purchases have now increased for 19 consecutive months, according to the survey.

However, suppliers’ performance deteriorated again during September.

Businesses reported delays in international transportation and higher fuel costs, which contributed to longer delivery times and added pressure to supply chains.

The September figures therefore present a mixed picture of Uganda’s private sector.

On one hand, businesses continue to benefit from consumer demand, rising new orders, increased hiring and stronger purchasing activity.

On the other, higher fuel, transport, utility and wage costs, together with delayed customer payments and supply delays, are making it more expensive and difficult for firms to keep up with demand.

The PMI’s continued reading above 50 suggests that the private sector remains on a growth path, even though the slower September reading points to a moderation in the pace of expansion.