In a recent survey conducted by Stanbic Bank, it was found that private sector businesses have experienced an above-average performance for the first time in 11 months. This marks a return to performance levels last observed before the Covid-19 pandemic in 2019.
The survey, which assesses economic performance by interviewing CEOs and purchasing managers from various businesses, revealed that the Purchasing Managers Index (PMI) increased to 52.9 in September, up from 51.6 in August. This figure is slightly higher than the series average of 52.6, indicating a positive trend.
Notably, this is the first time in 11 months that the PMI has exceeded the average performance recorded before the pandemic. During this period, the private sector has consistently shown growth in new orders for 14 consecutive months, as well as increases in employment, output, and purchasing activity.
Data from the Uganda Bureau of Statistics further supports the idea of an improving economy, with key indicators such as inflation declining from 3.5 percent in August to 2.7 percent.
According to Mr. Christopher Legilisho, an economist at Stanbic, the September data points to a continued rise in business activity, with employment increasing for the sixth consecutive month. This is largely due to the need to meet the rising demand for new orders and to address outstanding business needs.
Despite the positive outlook, it’s worth noting that input costs have continued to rise over the past 11 months. The Purchasing Managers Index is compiled by S&P Global and involves input from purchasing managers in various sectors, including agriculture, mining, manufacturing, construction, wholesale, retail, and services.
In September, the index showed significant increases in new orders (30 percent), output (25 percent), employment (20 percent), and improvements in suppliers’ delivery times (15 percent) and the stock of purchases (10 percent). Mr. Legilisho attributed these improvements to effective marketing strategies, which encouraged companies to expand their business activities across all five sectors covered by the survey.
However, during this period, businesses reported higher staff costs and stock prices due to increased hiring and rising input prices, especially in cement, food products, and metal bars. Other input prices also saw increases in construction materials, fuel, and utilities.
Suppliers’ delivery times lengthened due to reported shortages of items, particularly food products, while new business from abroad decreased for the second consecutive month, primarily due to a drop in export orders over the past nine months.
Despite these challenges, businesses maintain a positive outlook for the future, with over 87 percent of surveyed purchasing managers projecting an expansion in business activity over the next 12 months.