The private sector in Uganda experienced a robust conclusion to the year 2023, with increased demand for goods and services reported in the month of December. Both the Uganda Bureau of Statistics (UBOS) and the Stanbic Purchasing Managers Index (PMI) indicated positive trends in business performance and inflation indicators for the private sector.
December witnessed a surge in customer numbers, translating to higher new orders and increased business activity. The headline monthly PMI rose to 54.8 from November’s 53.4, marking the highest reading since June 2023 and continuing above the 50.0 no-change mark for the fourteenth consecutive month. A PMI reading above 50.0 signals a positive and improving investor perspective on business performance.
The PMI, compiled by S&P Global, collects responses from purchasing managers in leading sectors such as agriculture, mining, manufacturing, construction, wholesale, retail, and services. The data revealed a consistent trend of robust growth in private-sector activity, with both output and new orders rising for the seventeenth consecutive month due to increased customer demand.
According to the UBOS December consumer price index, major price increases were observed in fuel, rice, motorcycles, and transport compared to November. This can be attributed to the heightened demand for goods and services in December, aligning with the findings of the Stanbic PMI regarding private sector activity.
Increased demand led to a surge in hiring for the ninth consecutive month, with firms employing staff on both a permanent and temporary basis to manage growing orders and purchasing activity. Despite increased employment, there was a rise in backlogs of work, primarily concentrated in the agriculture sector.
“However, this capacity enhancement was not sufficient to prevent a first increase in backlogs of work on record. Meanwhile, input costs and selling prices continued to rise,” stated Christopher Legilisho, Economist at Stanbic Bank.
All five broad sectors posted an increase in output for the first time in three months, with the wholesale and retail category returning to growth. Despite challenges such as rising input costs and selling prices, companies remained optimistic about the 12-month outlook for business activity, driven by expectations of further increases in customer numbers in 2024.
