The Ugandan private sector has started the New Year with a growing sense of confidence according to the results of latest Stanbic bank PMI index figures for January 2018.
Registering 52.0 well above the 50.0 threshold that indicates an improvement in business conditions, this figure represents the twelfth such expansion in as many months.
Analysing the results, Stanbic Bank’s Fixed Income Manager Benoni Okwenje, noted that, “Private sector output expanded driven mainly by an increase in expenditure within the construction sector. New orders also continued to rise brought about by stronger demand both domestically and globally. Meanwhile anecdotal evidence suggested that greater marketing efforts contributed to the rises in both new business and output.”
“Greater purchasing activity also enabled further growth in operating capacity. This allowed private sector companies to work through outstanding business. Suppliers also coped with higher volumes of new orders, with delivery times shortening again in January.” Benoni added.
The report showed greater demand caused cost pressures to continue, with overall input costs increasing further at the start of the year. A rise in costs was registered across the wholesale & retail, agriculture, construction, industry and services sub-sectors. Both purchase prices and staff costs increased in January.
Making a forecast of the Ugandan economy in 2018, JibranQureishi, Stanbic Bank, Regional Economist for East Africa said, “Annualized we expect the Ugandan economy to grow between 4.5%-4.8% in 2018. This will be driven by improvements in agricultural productivity and an increase in public investment in infrastructure to support economic activity over the coming year, which is why we project GDP growth to be in the region of 5.6% in 2018.”
Uganda’s economy posted a strong 7.5% annual growth rate in Q3; the economy shifted into a higher gear for the fourth consecutive quarter. Indicators suggest that the momentum lasted throughout the final quarter of the year. December’s PMI showed business conditions remained strongly expansionary. Moreover, the business tendency survey and economic activity index both recorded improvements in Q4.
The Stanbic PMI is a composite index, calculated as a weighted average of five individual sub-components: 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.
