April saw continued positive conditions for Uganda's private sector, with the Stanbic Purchasing Managers' Index (PMI) rising to 55.3, up from 52.9 in March. A PMI reading above 50.0 signals growth, while a figure below 50.0 indicates contraction.
The survey, which tracks business activity, revealed that the increase in the PMI was driven by expansions in activity and new orders, with respondents noting a strong sales environment. Firms were optimistic about the year ahead, with increased hiring and expanded purchasing to support new orders.
Christopher Legilisho, Economist at Stanbic Bank, said, "April data for the Stanbic PMI was strong, implying a vibrant private sector which is more and more optimistic about current and future consumer demand." He explained that private sector conditions had improved for the third consecutive month, driven by strong customer demand and marketing campaigns that led to more new orders and increased output. All sectors experienced growth, with new clients and improving consumer purchasing power. Employment and inventory purchases also rose to meet the growing demand, while backlogs decreased.
The Stanbic PMI, compiled by S&P Global, surveys approximately 400 purchasing managers across sectors like agriculture, mining, manufacturing, construction, wholesale, retail, and services.
However, higher input and staffing costs led to a rise in overall prices. Legilisho explained, "Input and output prices increased due to higher utility bills and price hikes for certain items, as well as rising staffing costs linked to the addition of more employees."
The PMI data also highlighted a fourth consecutive month of reduced work backlogs, supported by increased hiring. In response to greater demand, businesses expanded their purchasing activity, including efforts to build safety stocks for the second consecutive month. However, supplier capacity faced pressure, and delivery times lengthened for the first time in 17 months.
Despite these challenges, businesses managed to pass on higher costs to customers through increased output charges. Looking forward, firms are optimistic about continued growth, expecting stronger client demand and planned investments in advertising to drive further expansion.
