January 04, 2019 -Ugandan businesses increased their purchasing activities and hired more towards the end of 2018 in tandem with a rise in demand according to the December edition of the Stanbic Bank Purchasing Manager’s Index (PMI).
The index closed December on a high of 56.6, almost a point above the 55.7 registered in November and way above the series average of 53.2. This indicated improved business conditions at the end of the year according to experts.
According to Jibran Qureishi, Stanbic’s Regional Economist for East Africa, that performance suggests strong improvement in underlying demand and justifies the posture of the Bank of Uganda’s Monetary Policy Committee which maintained its key rate for December at 10pc amidst fear of near term inflationary risk.
“Overall input prices increased again in December, with rises in both purchase prices and staff costs contributing to overall inflation. Where purchase prices rose, companies reported higher fuel costs and increased prices for raw materials such as food items and cement,” says Benoni Okwenje, Stanbic Uganda’s Head of Fixed Income.
According to the survey findings, the improvement was fuelled by a rise a rise in new business, which firms linked to stronger client demand and higher customer numbers. Firms supported this expansion by increasing staffing levels, purchasing activity and inventories during the month. Save for construction, four of the five broad sectors covered by the survey saw employment rise.
As has been the case throughout the 31-month survey so far, output prices increased during December. Respondents said a buoyant demand environment helped the firms to pass on higher input costs to their customers.
“It is indeed a strong finish to 2018 for the private sector. Despite rising costs, firms have easily been able to pass this on to consumers,” Jibran said in comments on the survey results.
Sponsored by Stanbic Bank and produced by IHS Markit, the survey has been conducted since June 2016 covering the agriculture, industry, construction, wholesale & retail and services sectors. The headline figure derived from the survey is the Purchasing Managers’ Index™ (PMI™) which provides an early indication of operating conditions in Uganda.