October 22, 2017

Higher input costs affect September business sentiment

October 5— Higher overhead costs during September, contributed to the dip of business confidence during that month according to the latest Stanbic Bank Purchasing Managers’ Index (PMI), however this comes on the back of further job creation from new orders.

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Workers who have upgraded their skills are more likely to find employment as overall job creation remains consistent.

The seasonally adjusted PMI registered at 53.8 in September, down slightly from 54.1 in August. According to the survey, which is carried out in conjunction with IHS Markit  one of the world’s leading financial information services providers, purchase prices increased in September amid reports from about 400 panelists of higher raw material costs.

Meanwhile, staff costs were also up over the month. Overall input costs rose across each monitored sector. With cost burdens rising, companies increased their output prices accordingly. However there was some promising trends.

For the eighth month running, output and new orders increased in September. Anecdotal evidence pointed to improved underlying demand and inflows of new clients as being behind growth of activity and new work.

Notably, for the first time in the survey’s 16-month history, new business from abroad expanded during September. This was linked to entry into new markets in some of Uganda’s key trading partners amid less challenging political conditions.

The agriculture, industry, services and wholesale & retail sectors continued to register growth of output and new business inflows in September. Meanwhile, construction output decreased and the sector saw no change in new orders.

Firms increased their workforce numbers to work on new projects and help meet increasing levels of demand. Job creation across the private sector as a whole has been seen in each month since the inception of the survey.

Jibran Qureishi, the Stanbic Bank regional economist said, “Overall job creation is a trend we have witnessed since the inception of the survey 16 months ago. Higher new orders also led Ugandan private sector firms to increase their quantities of purchases for the fourth month running.  Inventories grew as a consequence. Meanwhile,  firms  were  able  to  work  through  their backlogs  of  work,  with  the  latest  decline  in  outstanding business the sixteenth in as many months.”

Higher new orders also led Ugandan private sector firms to increase their quantities of purchases for the fourth month running. Inventories grew as a consequence. Meanwhile, firms were able to work through their backlogs of work, with the latest decline in outstanding business the sixteenth in as many months.

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