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Strong demand conditions drove growth in input buying, as firms stocked up amid anticipation of more upturns in activity later in the year, slightly lifting the monthly Stanbic Purchasing Managers’ Index (PMI).
The headline Stanbic PMI rose to 52.9 during March, up from 52.6 in February. The latest data indicated back-to-back improvements in the health of the Ugandan private sector for the second month running. There were also further increases in output, new orders and employment.
Christopher Legilisho, Economist at Stanbic Bank said, “The March PMI for Uganda confirmed a private sector with still sound consumer demand aiding growth in output, new orders, employment, and inventories. All sectors surveyed displayed broad-based growth in activity on average in Quarter One (Q1) 2025. Further, firms remained optimistic about the economic outlook, foreseeing sustained consumer demand over the coming year.”
The monthly survey is compiled by S&P Global from responses to questionnaires sent to about 400 purchasing managers. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services.
It is a weighted average of the following five indices: 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.
New business received by Ugandan companies increased again, as panelists highlighted new customer acquisitions and favourable demand conditions. However, inflationary pressures persisted as higher purchase and staff costs drove up overall input prices. Accommodative demand conditions enabled firms to continue raising their output charges.
Legilisho said, “Rising input costs kept prices under pressure in March. Pricing strains were felt by firms as utility bills, shipping fees and commodity prices went up, while staff costs and output prices increased for a further month. Promising economic conditions allowed firms to pass on costs to consumers. The March PMI implies a sustained improvement in economic conditions in the private sector.”
In line with a broad-based upturn in new orders, the five monitored sectors also recorded greater business activity at the end of the first quarter. Business confidence in the outlook for output over the coming 12 months remained upbeat in March. Optimism was reportedly underpinned by hopes of further improvements to the sales environment and new client wins.
Subsequently, firms raised their staffing levels to accommodate greater new order inflows and anticipated growth in output in the coming months. All five monitored sectors registered higher staffing levels, with some respondents mentioning this was largely due to the hiring of temporary workers.
Nonetheless, increased capacity following job creation enabled firms to deplete their backlogs of work for a third month running in March.
At the same time, Ugandan businesses stated that higher utility, raw material and staffing costs led to a broader rise in operating expenses in March. Purchase prices and wage bills rose again on the month.
In response to higher costs, companies raised their output charges for the seventh month running. An upbeat sales environment enabled firms to pass on greater input prices to clients.
In line with a rise in new orders, Ugandan firms expanded their input buying and sought to build safety stocks. There was a fresh increase in pre-production inventories during March, aided by a further improvement in suppliers’ delivery times.
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