Uganda’s private sector improved in February after a brief slowdown in January, pushing the Stanbic Purchasing Managers’ Index (PMI) up to 52.6 from 49.5.
Christopher Legilisho, an economist at Stanbic Bank, said the latest PMI shows strong growth in output and new orders, marking a return to expansion.
“The private sector is back in growth, with strong demand across all sectors. Employment rose again after three months of decline, driven by increased new orders, while backlogs fell due to sufficient capacity. Firms ramped up purchasing, but inventories dropped for the first time in a year,” he said.
The February survey found that output and new orders expanded as demand strengthened. Businesses increased input buying and hiring, showing confidence in future growth.
However, companies faced higher costs, with rising purchase prices and wages. As a result, firms raised their prices for the sixth straight month to offset these costs.
“There was pricing pressure from higher utility bills and commodity prices. Staff costs and output prices also increased, but at a slower pace. While private sector optimism remains strong, it dipped slightly compared to January. The PMI signals stable economic conditions,” Legilisho added.
The Stanbic PMI, compiled by S&P Global, surveys around 400 purchasing managers across agriculture, mining, manufacturing, construction, wholesale, retail, and services.
The index is based on five components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%). A reading above 50.0 indicates business growth, while below 50.0 signals a decline.
Survey respondents said stronger demand and increased new orders boosted output, resuming a growth trend seen since April 2024, which briefly stalled in January. Many firms credited the rise in new customers for the turnaround. Growth in new orders was broad-based across all sectors.
Higher sales pushed businesses to expand their workforce, ending a three-month stretch of job losses. Among the five surveyed sectors, only manufacturing saw a drop in employment. The rise in hiring eased pressure on operations, reducing backlogs.
Meanwhile, business costs climbed as firms paid more for purchases and staff. Higher utility bills and raw material costs were cited as key reasons for inflation.
