Stanbic Bank PMI points to steady economic recovery

The headline Stanbic Bank Purchase Managers Index (PMI) for Uganda indicates there has been an improvement in private sector business operating conditions in the country following a rise from 52.8 to 54.3 in July.

The index posted above the neutral 50.0 threshold for the sixth consecutive month, supported by expansions in new orders, output, employment and stocks of purchases.

Speaking about the main drivers of the PMI’s continued growth Jibran Qureishi, Regional Economist E.A at Stanbic Bank said, “The recent recovery is underpinned by the agriculture sector following the relatively decent long rains. That being said, the manufacturing and retail sectors are still sluggish but are likely to gradually recover as access to credit improves over the course of the year. In addition to this, government expenditure on public infrastructure projects is also likely to support economic activity over the near to medium term.”

Analysing the performance of some of the other key sectors in Uganda’s economy, Anne Juuko, Stanbic Bank’s head of Global Markets, revealed that, “Growth in the industry and service categories was maintained in July. However, the wholesale & retail sector recorded no change in business conditions, following a contraction in June.”

Looking at overall employment Anne noted, “The ongoing upturn in output continued to feed into the labour market, as employment growth in four of the five monitored sub-sectors more than offset a reduction in staffing levels in the wholesale & retail sector.”

On the price front, overall input prices rose at the start of the third quarter.  Inflation was recorded across all five sub-sectors monitored by the survey.

Subsequently, output charges rose during July, but firms were restricted in their ability to fully pass on higher cost burdens to clients amid reports of strong competition.

The Stanbic PMI is a composite index, calculated as a weighted average of five individual sub-components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%).

Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.