Uganda’s private sector continued to show strong performance in April, as the headline Stanbic Purchasing Managers’ Index (PMI) rose to 55.3, up from 52.9 in March. A reading above 50.0 signals an improvement in business conditions compared to the previous month, while a score below 50.0 indicates deterioration.
The latest PMI survey reveals that the upturn was driven by further increases in both business activity and new orders. Respondents cited a robust sales environment and expressed optimism about the year ahead. To accommodate the rise in demand, firms expanded their workforces and boosted input purchases, which also helped reduce backlogs.
“April data for the Stanbic PMI was strong, implying a vibrant private sector that is increasingly optimistic about current and future consumer demand,” said Christopher Legilisho, Economist at Stanbic Bank.
He added, “Business conditions improved for the third consecutive month, supported by strong and sustained customer demand. Marketing efforts played a key role in driving both new orders and output. Gains were recorded across all sectors, aided by new client acquisitions and improved consumer purchasing power. Companies responded by increasing employment, purchasing, and inventories to meet this demand. As a result, backlogs declined in April due to expanded capacity.”
The Stanbic PMI is compiled by S&P Global based on responses from around 400 purchasing managers across sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services. It is a weighted average of five components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%).
While business activity strengthened, firms also faced higher input costs in April. These were driven by increased purchase and staffing expenses, including elevated utility bills and price hikes for selected goods. Companies responded by raising output prices to offset cost pressures.
“Input and output prices rose due to higher utility bills and material costs, along with increased wages needed to manage growing workloads,” Legilisho explained.
The data indicated continued growth in new business since February, supported by effective marketing campaigns that attracted new clients and boosted sales. Activity and new orders expanded broadly across all sectors.
In response to increased demand, Ugandan businesses created jobs for the third consecutive month in April. Additional hiring supported output requirements and helped reduce work backlogs for the fourth month in a row.
Purchasing activity also rose as firms sought to build safety stocks, resulting in inventory accumulation for the second month running. However, supplier delivery times lengthened for the first time in 17 months, suggesting renewed pressure on supplier capacity.
Despite rising costs, many firms successfully passed them on to customers through higher output charges. Looking ahead, business owners remain optimistic, citing expectations of stronger demand and planned investments in marketing and advertising.
