Ugandan private sector firms saw improved operating conditions in February, reversing a brief decline at the start of the year. This rebound pushed the headline Stanbic Purchasing Managers’ Index (PMI) up to 52.6 from 49.5 in January, signaling a return to expansion.
According to Christopher Legilisho, Economist at Stanbic Bank, “The Uganda PMI for February reflects a recovering private sector, with both output and new orders growing robustly after a dip in January. Demand was strong across all sectors, leading to increased employment after three months of decline. Backlogs of work also fell due to sufficient capacity, while purchasing activity surged as firms factored in the recovery. However, inventories declined for the first time in a year.”
The February survey attributes renewed growth to expansions in output and new orders, driven by stronger demand. As confidence in the business outlook remained steady, companies increased both input purchases and staffing levels.
However, firms faced higher cost burdens, with both purchase prices and wage bills rising. In response, businesses raised their output prices for the sixth consecutive month to offset the rising costs.
“There were pricing pressures due to increasing utility bills and selected commodity prices,” Legilisho noted. “While staff and output costs continued to rise, the pace was moderate. Optimism about future output remains strong, albeit slightly lower than in January. Overall, the February PMI suggests resilient economic conditions in the private sector.”
Compiled by S&P Global, the monthly Stanbic PMI is based on responses from approximately 400 purchasing managers across key sectors, including agriculture, mining, manufacturing, construction, wholesale, retail, and services. The index is weighted as follows: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%). A reading above 50.0 indicates improving business conditions, while a reading below 50.0 signals deterioration.
Survey participants reported that stronger demand and a resurgence in new orders supported output growth. The increase in new business resumed a positive trend seen since April 2024, which was briefly interrupted in January. Many firms cited customer acquisition as a key factor in this recovery, with new order growth observed across all sectors.
Rising sales encouraged Ugandan companies to expand their workforce in February, ending a three-month period of job cuts. However, manufacturing was the only sector that recorded a decline in employment. The increase in staffing helped ease capacity pressures, leading to a further reduction in backlogs of work.
Despite these gains, business expenses rose, driven by higher purchase and staff costs. Increased utility bills and rising material prices were frequently mentioned as key contributors to inflation.
