The Stanbic Purchasing Managers’ Index (PMI), a key indicator of private sector outlook, declined to 53.1 in December from 55.7 in November, reflecting a slight slowdown in momentum.
Christopher Legilisho, Economist at Stanbic Bank Uganda, said: “The December PMI data highlights sustained strong private sector growth, with businesses remaining optimistic about current and future economic conditions. Private sector business conditions have expanded for nine consecutive months due to strong customer demand, leading to increased output and new orders, despite a decline in employment for the second straight month.”
Legilisho added that new order growth was broad-based, driven by the acquisition of new clients and improved consumer purchasing power. This growth resulted in higher backlogs of work, as firms ramped up purchasing activity and inventories to meet strong demand.
The PMI, compiled by S&P Global, is based on responses from purchasing managers in 400 private sector companies across key sectors, including agriculture, mining, manufacturing, construction, wholesale, retail, and services. A reading above 50 signals improved business conditions compared to the previous month, while a reading below 50 indicates a contraction.
December’s private sector growth was bolstered by increases in output and new orders, continuing a nine-month expansion streak. Companies secured new customers, driving growth across all five surveyed sectors.
Looking ahead to 2025, businesses expressed confidence in continued growth, buoyed by competitive pricing and expectations of rising customer numbers.
Legilisho noted: “Input and output price pressures persisted due to elevated utility bills and higher costs of materials such as timber, foodstuffs, and paper products. However, staffing costs remained stable as wage increases were offset by reduced employment. This moderation suggests that easing monetary policy could be plausible in the near term.”
Despite optimism, employment levels declined for the second month, largely due to non-replacement of staff who left. However, the industrial sector bucked this trend, reporting an increase in workforce numbers. A reduction in staffing during a period of new order growth led to backlogs of work increasing for the first time in four months.
In contrast, purchasing activity rose as companies expanded their input stocks. Improved supplier competition resulted in faster delivery times compared to November. Nonetheless, higher material costs drove up purchase prices, contributing to a fourth consecutive month of output price increases.
Agriculture, industry, and services sectors reported higher charges, while construction and wholesale & retail saw declines in output prices. Despite cost pressures, businesses remained optimistic about sustaining growth into the new year.
