Ugandan companies reported continued expansion in business activity in August, marking the seventh consecutive month of growth. The Stanbic Bank Purchasing Managers' Index (PMI) remained above the positive threshold of 50.0.
In August, the PMI stood at 53.3, slightly down from 53.6 in July, but still showing improved conditions for the private sector since February.
Christopher Legilisho, Economist at Stanbic Bank, said, "The PMI reflects strong economic conditions in the private sector in August. Ongoing growth in new orders and output suggest favourable business conditions across all sectors. Additionally, purchases of inputs increased, and inventories grew. Companies remain optimistic about future output."
He added, "Employment conditions were strong in August, except in manufacturing, where staffing levels were unchanged. Inflationary pressures persisted, with rising input prices, purchase costs, and staff costs. The headline CPI remained unchanged from July."
The Stanbic Bank PMI, compiled by S&P Global for Stanbic Bank Uganda, is based on responses to monthly surveys sent to purchasing managers. The survey covers sectors such as agriculture, mining, manufacturing, construction, wholesale, retail, and services.
The PMI is a weighted average of five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%).
In August, panelists attributed the upturn to stronger demand and continued new order growth. This was supported by increased output, new orders, employment, and inventories. Positive expectations for future business activity also drove growth in input purchases.
Job creation and greater capacity helped firms manage their backlogs. However, rising purchase and staff costs pushed input prices up. Favourable demand allowed companies to pass on higher costs to customers through increased selling prices.
New sales rose for the seventh consecutive month, driven by successful marketing campaigns. All sectors reported growth in both output and new orders.
Companies also boosted input buying and built safety stocks to process new orders. As a result, backlogs were reduced for the seventh time in the past eight months, while vendor performance remained stable.
Although agriculture and construction saw decreases in input prices, the increase in output charges was widespread across sectors.
Output expectations for Ugandan companies remained positive in August, with firms anticipating further growth in the coming year. Confidence was supported by planned investments in advertising and client outreach.
