Stanbic PMI survey shows decline in Ugandans purchasing power despite business robustness

Ugandans are struggling to purchase items they need for their businesses and daily life, the Stanbic PMI survey has revealed. 

The latest Stanbic Headline Purchase Managers Index (PMI) posted a fall for the second successive month in December, declining to 51.2 from 53.9 in November. The reading continued to signal an improvement in business conditions but was below its average of 53.0.

The 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%).

Notably, new orders increased for the sixth month running, with growth supported by the securing of new customers. As a result, business activity also rose, despite reports from some firms that a scarcity of money had limited their output. 

Furthermore, activity increased in the agriculture and service sectors, but decreased in construction, industry and wholesale & retail.

Commenting on the Stanbic PMI Survey Ferishka Bharuth, Economist at Africa Regions at Stanbic Bank noted: “While the PMI still indicates expansion, with companies largely positive that economic activity is likely to expand over the coming year, underlying weaknesses remain.”

The survey further shows there was a drop in employment in December linked to voluntary resignations. The companies in Uganda also reduced the staffing levels for the first time in five months ending a 4-month sequence of job creation with the industry being the only sector to post an increase in staffing levels. 

The survey predicts a pick-up in business in 2021, particularly after the upcoming elections have concluded.

About the Stanbic PMI Survey

The Stanbic Bank Uganda PMI is compiled by IHS Markit from responses to questionnaires sent to purchasing managers in a panel of around 400 private sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services. Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show a deterioration.