Operating conditions for Ugandan private sector firms improved in February, following a brief decline at the start of the year, according to the latest Stanbic Purchasing Managers’ Index (PMI).
The headline PMI rose to 52.6, up from 49.5 in January, signaling a return to growth in the sector.
Christopher Legilisho, Economist at Stanbic Bank, said: “The Uganda PMI for February shows a private sector back in expansion, with both output and new orders growing robustly, after dipping in January.”
According to the survey, renewed growth in part stemmed from expansions in output and new orders, which also saw fresh increases. Demand conditions reportedly strengthened, with companies also stepping up their input buying and staffing levels amid sustained confidence in the outlook for output.
Firms resumed hiring in February, ending a three-month sequence of job shedding, with greater new sales spurring Ugandan companies to increase their staffing levels.
Of the five sectors monitored by the survey, only manufacturing recorded a drop in employment. The rise in headcounts reportedly helped ease pressure on capacity, as Ugandan firms registered a further decrease in backlogs of work midway through the first quarter.
However, Ugandan firms recorded greater cost burdens, as both purchase prices and wage bills increased. Subsequently, firms hiked their output charges for the sixth month running in a bid to pass through higher costs to clients.
“There was pricing pressures related to input and purchasing prices as utility bills and selected commodity prices increased,” said Mr Legilisho.
“Staff costs and output prices increased for a further month but at a muted pace. The private sector remains highly optimistic about future output, although optimism has dipped slightly since January.”
The monthly Stanbic PMI 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.
The Stanbic PMI 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.
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