Source: UGANDA BUSINESS NEWS
August data suggests economic recovery continues to strengthen
Activity across Uganda’s private sector grew fastest in 14 months in August, pointing to a pick-up in demand as the country’s economic recovery gains momentum.
The Stanbic Bank Uganda Purchasing Managers’ Index rose to 56.3 in August, up from 53.7 in July and the highest reading since June 2023, data released on Wednesday showed.
A reading above 50 in the index, compiled by research group S&P Global, indicates a majority of businesses reporting an expansion.
Christopher Legilisho, economist at Stanbic Bank, said: “The August PMI shows a resilient private sector economy. For a fifth month now, firms reported strong output and new orders linked to new clients and strong demand conditions across all surveyed sectors.”
The report said that firms expected output to rise over the next year, which, together with pressure on their capacity — with backlogs of work rising for the first time in eight months — was responsible for an increase in hiring during the month.
GDP growth has rebounded strongly after slowing last year in response to external shocks, the Bank of Uganda said last month, averaging 6.7 per cent year-on-year in the first half of this year, up from 5.3 per cent in the last six months of 2023.
“There are signs that the continued recovery in real incomes and rising confidence are beginning to translate into stronger consumption, despite the tight monetary policy,” the BoU said. “Indeed, the high-frequency indicators of economic activity indicate improvement in business conditions, as shown by the sustained expansions in output and new orders.”
The PMI showed that operating costs for private sector companies increased in all sectors except agriculture, driven by a rise in input prices and staff costs.
Despite the increase in operating costs, output prices fell for the first time since March 2023, which S&P Global attributed to businesses trying to attract new customers and remain competitive. The decline in selling prices was led by the agricultural, industrial, and wholesale and retail trade sectors, the report said.
In addition, firms increased their purchases of inputs as they built up inventories, boosted by their optimism that new orders will rise over the next 12 months.
AUTHOR: Uganda Business News
