Business activities in Uganda on rise

The private sector in Uganda has continued to recover in the April with business conditions, employment and purchasing orders consistently improving.

Since February this year, it has secured greater volumes of new orders amidst normal operating conditions.

The Purchasing Managers’ Index (PMI) rose to 57.8 in April from 53.2 in March.

This has signaled a third successive monthly improvement in business conditions since the series began with an average of 53.0.

The PMI monthly survey which is sponsored by Stanbic Bank and produced by IHS Markit has been conducted since June 2016.

It involves the distribution of questionnaires to over 400 purchasing managers and covers the sectors of agriculture.

Other sectors include industry, construction, wholesale & retail and services.

The headline PMI figure provides an early indication of operating conditions in Uganda.

“Firms posted an increment in new orders and output across each of the five broad sectors,” the Head of Trading, Stanbic Bank Uganda Ronald Muyanja said.

“They have extended the current sequence of expansion and growth at the start of the second quarter which is an indication that Uganda’s economy is stabling.”

“A number of respondents indicated that they had secured new customers during the month,” he added.

The 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 deterioration.

According to the April report, the purchasing activity expanded, feeding through to a rise in stocks of inputs.

Expectations of further improvements in economic conditions and new order inflows supported the ongoing optimism in the 12-month outlook for business activity with 85% of respondents predicting a rise in output over the coming year.

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