Business conditions in the private sector continued to improve in May, with the Stanbic Bank Purchasing Managers’ Index (PMI) rising to 56.4, up from 55.3 in April the highest level recorded in nearly two years.
The PMI, compiled by S&P Global, reflects strong momentum in key sectors such as agriculture, construction, manufacturing, and services, with figures above 50 indicating economic expansion.
The sustained growth was driven by a surge in new orders and increased customer demand, according to the report.
“PMI data for May shows continued strength in Uganda’s private sector, reaching the highest level in 23 months,” said Christopher Legilisho, Economist at Stanbic Bank.
“Robust demand supported growth in output and hiring, as firms responded to rising sales by expanding staff and increasing production.”
All five monitored sectors reported job creation, marking the fourth consecutive month of employment growth. Both part-time and full-time hires were added, with some firms paying out bonuses to motivate workers.
This led to an uptick in staffing costs, alongside rising expenses for essential inputs like food, cement, and soap.
Rising demand also prompted firms to expand purchasing activity and accumulate inventories in anticipation of future business.
However, companies continued to face inflationary pressures, with higher purchase and wage costs pushing up selling prices, particularly in the agriculture and service sectors.
Despite these cost pressures, optimism remains high.
Firms cited increased advertising, promotional investments, and strong demand prospects as reasons for positive expectations over the next 12 months.
The May data marks the fourth straight month of improved operating conditions.
Firms also reported reduced backlogs for the fifth month in a row, indicating enhanced operational capacity.
The PMI survey is based on responses from purchasing managers at 400 private sector firms and weights factors including new orders, output, employment, delivery times, and stock levels.
Legilisho noted that although vendor performance declined slightly, the overall business outlook remains positive.
“Firms remain confident of future growth, and the sustained improvement signals resilience in Uganda’s private sector,” he said.