September 5—Business outlook in Uganda continues to improve albeit slowly with the latest Stanbic Bank Uganda Purchase Manager’s Index (PMI) rising to 54.3 in August from 54.1 in July, 2017. The seasonally adjusted index remains above the average recorded over 15 months of data collection to date.
“Following stability in the preceding month, the wholesale & retail sector returned to growth in August. In addition further improvements in business conditions across the remaining sectors, (agriculture, construction, industry and services), were maintained from the previous survey period,” Anne Juuko the SBU Head of Global Markets said early this week.
The Stanbic 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 a deterioration.
Jibran Qureishi, the Regional Economist East Africa at Stanbic Bank said, “The private sector continued to show encouraging signs of improvement in August with the PMI average recorded over the past two months of 54.2 being much higher than the 51.6 average in the first two quarters of 2017.
Qureishi said, “Indeed, even though export orders were down in August, firms are likely to begin exporting much more over the remainder of the year and beyond as political risk in key trading partners could begin to subside. Moreover, the current stable macroeconomic environment is likely to bode well for the Ugandan private sector in FY2017/18 and continue to moderately get the economy back on firm growth trajectory path. ”
Juuko said the Uganda’s private sector registered increases in both output and new orders for the seventh consecutive month. In response to greater output requirements, private sector firms raised their payroll numbers accordingly with all five monitored subsectors increased their staffing levels during August.
In contrast to the trend seen for total new business, new export orders fell during August, with panellists mentioning political instability in key export markets namely Southern Sudan and Kenya where fresh elections have just been announced.