Private Sector Output Continues Growth for Nineteenth Consecutive Month

by Business Times
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The private sector has sustained its upward trajectory for the nineteenth consecutive month, as reported by the Stanbic Purchasing Managers’ Index (PMI). Despite a slight dip in activity recorded in February, with the headline PMI dropping to 51.7 from January’s 54.0, overall business conditions in the private sector have continued to improve.

The PMI, a monthly survey conducted by S&P Global involving approximately 400 respondents across various sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services, indicates that sustained increases in output and new orders have been key drivers of growth. The PMI is calculated based on five indices, with readings above 50.0 indicating improvement and below 50.0 showing deterioration in business conditions.

Christopher Legilisho, an Economist at Stanbic Bank, noted that despite the slight softening of private sector activity, Uganda has maintained a streak of robust performance over the past 19 months, fueled by increased customer demand. Growth has been observed across construction, industry, services, wholesale, and retail sectors.

The report highlighted an influx of new clients supporting further expansion of business activity, though some panelists reported signs of softening demand. Output rose across four of the five monitored sectors, with agriculture being the only sector to witness a decline.

While activity in agriculture decreased in February, backlogs eased, prompting firms to increase staffing levels for the eleventh consecutive month. However, staffing costs declined for a second consecutive month despite higher input prices, as firms sought to balance output prices while limiting costs.

Looking ahead, higher customer numbers are anticipated to support increased output over the next year, with around 83% of respondents expressing optimism about the 12-month outlook for activity.

Employment rose again in February as firms worked to deplete backlogs of work, particularly in industry, services, and wholesale and retail sectors. However, trends varied by sector, with job creation contrasting with falling staffing levels in agriculture and construction.

Companies also increased purchasing activity, albeit with a decrease in stocks of inputs for the first time in three months. This was attributed to firms scaling back purchases amid signs of softening client demand.

Overall input costs rose due to higher prices for fuel, materials, and utilities, leading companies to increase selling prices accordingly. Charge inflation has now been recorded for the past 11 months.

Despite some challenges, companies were able to reduce backlogs of work for the second consecutive month, except in the construction sector where outstanding business increased.

It is worth noting that while the private sector in Uganda experienced a slight easing of activity in February, the overall trend remains positive, reflecting resilience and adaptability amid evolving market conditions.

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