Following a ten-month period of job creation, Ugandan companies recorded broadly unchanged employment levels and higher input costs in December. Despite these pressures, business conditions continued to improve, with the Stanbic Purchasing Managers Index (PMI) edging up to 54.0 in December 2025, from 53.8 in November.
A PMI reading above 50.0 indicates an improvement in business conditions compared to the previous month, while a reading below 50.0 signals deterioration. December’s reading marked the eleventh consecutive monthly improvement in business conditions.
As seen throughout much of 2025, growth was supported by sustained expansions in output and new orders. Strong demand conditions enabled firms to raise selling prices, while input price inflation persisted as purchase costs increased further.
According to the survey, firms remained optimistic about output prospects for the year ahead. This positive outlook encouraged increased input buying and stock-building efforts, although employment levels remained broadly unchanged.
Commenting on the findings, Christopher Legilisho, Economist at Stanbic Bank, said:
“Conditions in Uganda’s private sector remained upbeat as the Stanbic PMI stayed firmly in expansion territory in December. Strong consumer demand drove new orders and boosted output. Employment levels were healthy and broadly stable following a ten-month growth streak, while backlogs increased due to capacity pressures from rising orders. This was reflected in further expansions in quantities purchased and inventories held by Ugandan firms.”
The Stanbic PMI is compiled by S&P Global, based on responses from approximately 400 purchasing managers across key sectors including agriculture, mining, manufacturing, construction, wholesale, retail, and services.
The index is calculated using five components: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%), and Stocks of Purchases (10%).
Legilisho further noted that inflationary pressures intensified toward the end of the year:
“The rise in input prices was linked to elevated water and electricity costs in December. Purchase prices also increased due to concerns around construction costs, among other factors. Wage costs were broadly flat, while output prices rose on the back of strong customer demand. Overall, this suggests the economy is performing briskly, a trend likely to be confirmed when official growth data is released.”
Greater new orders continued to drive the latest expansion, with new sales rising continuously since February 2025. Survey respondents cited increased client numbers as a key driver of improved demand conditions.
While some firms expanded their workforce through temporary hires, the combination of rising new orders and stable employment levels led to a renewed accumulation of backlogs in December.
Inflationary pressures remained elevated as both input prices and output charges increased again. Higher operating expenses were mainly driven by rising purchase costs, despite a slight easing in wage bills. Utility costs, construction materials, and sugar prices were among the main contributors to increased input prices.
Firms responded by passing on higher costs to customers through increased selling prices, supported by strong seasonal demand typical of the festive period.
Meanwhile, input buying rose further in December as companies responded to higher order volumes. Increased demand placed pressure on suppliers, leading to longer delivery times, although firms were still able to rebuild inventories.
Looking ahead, output expectations for 2026 remain positive, underpinned by anticipated demand growth and increased investment in advertising and customer outreach, which continue to support broad-based optimism across the private sector.