Uganda’s private sector ends 2025 on solid ground as demand fundamentals strengthen

January 7, 2026 in Business, Companies, Trade & Industry by Editor

Uganda’s private sector closed 2025 on firm footing as robust demand continued to lift output and new orders, offsetting rising input costs and stabilising employment to keep the Stanbic PMI in expansion territory.

Uganda’s private sector closed 2025 with renewed confidence, supported by strong demand conditions that continued to lift output and new orders despite rising input costs and a plateau in employment levels. The December Stanbic Purchasing Managers Index (PMI) rose to 54.0 from 53.8 in November, marking the eleventh consecutive month of improving business conditions.

A reading above 50.0 indicates an improvement in operating conditions, and much of 2025 stayed firmly in expansion territory—an indication that the private sector maintained momentum even as cost pressures persisted.

The survey shows that customer demand remained the most important driver of economic activity through December, leading to further gains in output and new orders. New sales have now risen consistently since February 2025, supported by stronger client flows and improved business sentiment.

This demand resilience also encouraged firms to step up purchasing activity and rebuild inventories, suggesting businesses are preparing for continued expansion in early 2026.

Christopher Legilisho, Economist at Stanbic Bank, said the December data reflects an upbeat private sector environment. “Strong consumer demand conditions drove new orders and boosted output. Staffing levels were broadly steady following a ten-month period of growth, while backlogs mounted due to capacity pressure from increasing orders,” he noted.

After ten straight months of job creation, employment in December held largely unchanged. Firms reported only marginal movements in staffing levels, with some respondents citing an increase in temporary workers to meet elevated seasonal demand.

The flat employment figures, combined with stronger new orders, resulted in rising backlogs—an indication that capacity utilisation is increasing across several sectors.

Cost pressures intensify, but demand allows price adjustments

Input cost inflation accelerated in December, driven mainly by higher water and electricity prices, as well as rising construction, sugar and broader purchase costs. Wage pressures remained muted, with salary costs largely flat.

Supported by steady demand, companies were able to pass through some of these higher costs to customers through increased selling prices. This cost-pass-through behaviour points to solid market conditions, particularly during the festive season when consumer spending typically peaks.

Legilisho said the pattern of rising input prices alongside stronger demand “suggests that the economy is performing briskly, which should be confirmed when official growth data is released.”

Suppliers under pressure as purchasing activity rises

With firms increasing input buying to meet new orders, suppliers faced fresh pressure that led to longer delivery times. However, businesses still managed to accumulate inventory—another indicator of confidence ahead of 2026.

The Stanbic PMI is based on five key components: new orders (30pc), output (25pc), employment (20pc), suppliers’ delivery times (15pc) and stocks of purchases (10pc). It covers agriculture, mining, manufacturing, construction, wholesale, retail and services, with responses from around 400 purchasing managers.

Across the private sector, expectations for 2026 remain broadly positive. Companies cited anticipated improvements in demand—partly supported by increased investment in advertising and customer engagement—as reasons for their optimism.

With output, purchasing activity and order books all heading into the new year on a strong footing, the data suggests that private sector fundamentals are intact. The key watchpoints going forward will be how firms manage cost pressures and whether demand can continue to absorb higher operating expenses.

Uganda enters 2026 with a private sector that is still expanding, still optimistic, and still anchored in strong domestic demand—despite an operating environment that remains cost-intensive and capacity-tight.