Uganda’s private sector and business environment continued to improve albeit slowly in October according to the latest Stanbic Purchasing Managers’ Index (PMI) data.
The index value for October was 52.9, slightly down from September’s 54.2, yet still indicating positive growth in business conditions.
According to the data collected between October 10 and 29, 2024, the improvement in the Ugandan private sector is largely attributed to increased demand, prompting firms to ramp up their output and hire additional staff.
This growth is supported by greater spending on advertising and enhancements in product quality, contributing to buoyant demand conditions across various sectors.
Mulalo Madula, a senior analyst at Stanbic Bank, commented on the findings, saying the persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined.
While firms reported a rise in both purchase and staff costs, leading to higher overall input prices, the ability to pass these costs onto consumers resulted in increased selling prices.
This trend suggests a healthy demand environment, as all five monitored sectors experienced a rise in expenses. The survey highlighted that higher wage bills and raw material costs were significant factors driving inflation.
This research further highlights a positive demand outlook, where Ugandan businesses have also expanded their inventory levels, preparing for anticipated future growth.
Mulalo said despite the increase in costs, the overall business sentiment remains optimistic, with firms expressing confidence in continued demand trends and planned advertising spending.
“The persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined. The October PMI results underscore the resilience of the Ugandan economy, with businesses benefiting from buoyant demand,” Mulalo said.
The survey revealed rising input prices, as both purchase and staff costs saw increases, leading to higher selling prices.
However, the ability of businesses to pass these costs onto consumers suggests a healthy demand environment. Overall business sentiment remains positive, indicating that the private sector is likely to maintain its growth trajectory.
The data underscores the resilience of the Ugandan economy, with the PMI results indicating that the private sector is likely to maintain its growth trajectory in the coming months. As firms navigate the challenges of rising costs, their ability to adapt and respond to market demands will be crucial in sustaining this upward momentum.
The Stanbic PMI is compiled by S&P Global from responses to questionnaires sent to about 400 purchasing managers. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.
