Uganda: Stanbic Bank Pmi Shows Continued Expansion Despite Cost Pressures

Buoyant demand in July drove Ugandan businesses to boost purchasing activity and hire more workers, as backlogs of work grew for the first time since December 2024.

However, the headline Stanbic Bank Purchasing Managers' Index (PMI) dipped to 53.6 from 55.6 in June, reflecting slower growth momentum.

The PMI--compiled by S&P Global from a monthly survey of about 400 firms across agriculture, mining, manufacturing, construction, wholesale, retail and services--remains well above the 50.0 threshold that signals improving business conditions. It is a weighted average of New Orders (30%), Output (25%), Employment (20%), Suppliers' Delivery Times (15%) and Stocks of Purchases (10%).

Stanbic Bank Economist Christopher Legilisho said the data reflected "healthy economic conditions in the private sector" with quantities purchased and inventories both positive, and robust hiring recorded. "Backlogs of work increased for the first time since December 2024, likely due to strong new order demand," he noted.

Growth Across Sectors

July marked the sixth straight month of improving business conditions, with sustained increases in business activity and new sales across all monitored sectors. Strong demand, new client wins and frequent customer referrals fuelled the rise in orders, prompting businesses to increase output.

To meet demand, firms expanded staffing levels--hiring both temporary and permanent workers--though the manufacturing sector recorded a decline in employment. Purchasing activity also grew, with companies building safety stocks for the fifth month running, despite slower supplier delivery times.

Cost and Price Pressures

Input costs rose again in July, driven by higher purchase prices, wage bills, and rising costs for utilities, fuel, timber, and cereals. As a result, most firms raised selling prices to pass on the higher expenses, with construction the only sector to record a decline in output charges.

Positive Outlook

Business confidence remained strong, with firms expecting greater customer numbers and favourable demand conditions in the coming months. Legilisho said this optimism across all sectors "implies strong economic growth ahead."

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