In June, the Stanbic Purchasing Managers’ Index (PMI) recorded a slight dip to 55.6, down from 56.4 in May, despite private sector companies reporting ongoing improvements in business conditions. This marks the fifth consecutive month of positive growth, as the PMI remained above the 50.0 threshold, signalling expansion. The figures reflect notable growth in employment, purchasing, and stock levels.
Christopher Legilisho, Economist at Stanbic Bank, commented, "The Stanbic Uganda PMI showed overall expansion for a fifth straight month in June, driven by strong economic conditions in the private sector. Both output and new orders continued to grow, and employment expanded due to positive business growth expectations. This was further reflected in increased purchasing and higher inventories. We expect strong GDP growth in 2025, supported by positive demand across most sectors."
The June report indicated improved delivery times for inputs, allowing firms to reduce backlogs. However, the report also highlighted a rise in staff and purchase costs, though output charges remained largely unchanged.
The Stanbic PMI, compiled by S&P Global, is based on responses from approximately 400 purchasing managers across various sectors, including agriculture, mining, manufacturing, construction, wholesale, retail, and services. The index is a weighted average of New Orders, Output, Employment, Suppliers’ Delivery Times, and Stocks of Purchases.
Legilisho added, "Input prices, purchase costs, and staffing costs increased again, but output charges remained stable. Long-term trends point to subdued inflation due to favourable monetary conditions, an appreciating shilling, and deflation in energy prices. Headline inflation stood at 3.9% year-on-year in June, slightly up from 3.8% in May."
The report also noted a rise in new business in June, with firms reporting favourable demand conditions. As a result, many companies increased output levels, with the expansion in new business and activity seen across various sectors.
However, despite this demand, output charges remained stagnant for most firms. While some businesses sought to pass on higher costs to customers, others resorted to discounting to stay competitive. Only the agriculture and wholesale & retail sectors experienced an increase in selling prices.
Input costs continued to rise in June, with reports of higher staff and purchase costs, as well as rising fuel and material prices. Construction firms were the only sector to experience a drop in costs.
Businesses also registered an increase in employment, with a rise in both temporary and permanent staff driven by greater new order intakes. Firms expanded their capacity, helping them reduce their backlogs for the sixth consecutive month.
Moreover, shorter lead times for inputs and strong demand led to increased input buying and stockpiling during June. Overall, businesses remained optimistic about the year ahead, with confidence in the outlook linked to increased investment in advertising and a stronger focus on reaching new customers.
