Private sector optimistic about sales in 2025 after slow start to year

April 3, 2025 in Business by Editor

Strong demand conditions also drove growth in input buying, as firms stepped up efforts to build safety stocks amid anticipations of further upturns in activity in the coming 12 months.

The Stanbic Purchasing Managers’ Index (Stanbic PMI) rose slightly during March to 52.9 from 52.6 in February. A reading of 50.0 reflects negative sentiments about private sector conditions in Uganda.

Christopher Legilisho, Economist at Stanbic Bank said, “The March PMI for Uganda confirmed a private sector with still sound consumer demand aiding growth in output, new orders, employment, and inventories. All sectors surveyed displayed broad-based growth in activity on average in Q1 2025. Further, firms remained optimistic about the economic outlook, foreseeing sustained consumer demand over the coming year.”

The sectors covered by the survey include agriculture, mining, manufacturing, construction, wholesale, retail and services. The Stanbic PMI is a weighted average of the following five indices: New Orders (30%), Output (25%), Employment (20%), Suppliers’ Delivery Times (15%) and Stocks of Purchases (10%). Readings above 50.0 signal an improvement in business conditions on the previous month, while readings below 50.0 show deterioration.

March data signaled another monthly increase in new business at Ugandan private sector firms, the eleventh in the last 12 months. Anecdotal evidence commonly attributed growth in new orders to new client wins and sustained customer demand. All five monitored sectors registered an upturn in new business.

This is the second month of expansion amid further increases in output, new orders and employment. Strong demand conditions also drove growth in input buying, as firms stepped up efforts to build safety stocks amid anticipations of further upturns in activity in the coming 12 months.

Meanwhile, inflationary pressures persisted as higher purchase and staff costs drove up overall input prices. Accommodative demand conditions enabled firms to continue raising their output charges.

Legilisho said “Rising input costs kept prices under pressure in March. Pricing strains were felt by firms as utility bills, shipping fees and commodity prices went up, while staff costs and output prices increased for a further month. Promising economic conditions allowed firms to pass on costs to consumers. The March PMI implies a sustained improvement in economic conditions in the private sector.”

Companies widely attributed job creation to the hiring of temporary staff, with some also mentioning the addition of permanent employees. Moreover, all five monitored sectors recorded greater workforce numbers.

The level of input buying at Ugandan firms continued to expand at the end of the first quarter, thereby extending the current sequence of growth to almost two-and-a-half years. Strong demand conditions and greater business requirements were highlighted by panelists as driving factors behind the latest upturn in purchasing activity.