Ugandan Private Sector Growth Persists Despite Rising Costs — Shows Stanbic PMI

Uganda’s private sector continued its growth trajectory in October, marking the seventh consecutive month of expansion according to the latest Stanbic Purchasing Managers’ Index (PMI). Although the PMI fell slightly from September’s 54.2 to 52.9, it still signals positive growth in business conditions driven by strong demand, increased output, and new orders across multiple sectors.

Data from Stanbic Bank, collected between October 10th and 29th, reveals that heightened demand has prompted companies to expand their production capacity and workforce. This trend is particularly evident in the manufacturing sector, where firms are increasing staffing levels to keep up with customer orders while working to reduce backlogs.

Mulalo Madula, Senior Analyst at Stanbic Bank, commented on the findings, stating, “The latest PMI data for Uganda indicated a sustained expansion in the Ugandan private sector, marking the seventh consecutive month of growth. The persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined.”

While firms reported a rise in both purchase and staff costs, leading to higher overall input prices, the ability to pass these costs onto consumers resulted in increased selling prices. This trend suggests a healthy demand environment, as all five monitored sectors experienced a rise in expenses. The survey highlighted that higher wage bills and raw material costs were significant factors driving inflation.

This research further highlights a positive demand outlook, where Ugandan businesses have also expanded their inventory levels, preparing for anticipated future growth.

Mulalo adds that despite the increase in costs, the overall business sentiment remains optimistic, with firms expressing confidence in continued demand trends and planned advertising spending.

“The persistent increase in output reflects favourable demand, prompting companies, particularly in the manufacturing sector, to hire more staff, even as backlogs of work declined. The October PMI results underscore the resilience of the Ugandan economy, with businesses benefiting from buoyant demand.” Mulalo said adding that the sustained increase in output is encouraging, and firms are optimistic about future growth, bolstered by planned advertising spending and expectations of continued demand. Moreover, the survey revealed rising input prices, as both purchase and staff costs saw increases, leading to higher selling prices.

However, the ability of businesses to pass these costs onto consumers suggests a healthy demand environment. Overall business sentiment remains positive, indicating that the private sector is likely to maintain its growth trajectory.

The data underscores the resilience of the Ugandan economy, with the PMI results indicating that the private sector is likely to maintain its growth trajectory in the coming months. As firms navigate the challenges of rising costs, their ability to adapt and respond to market demands will be crucial in sustaining this upward momentum.

The Stanbic PMI is compiled by S&P Global from responses to questionnaires sent to about 400 purchasing managers. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.

The PMI is a weighted average of the following five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).