The Stanbic Bank Headline Purchase Manager’s Index (PMI) posted a 56.6 performance in December which signified an improvement in business conditions at the end of 2018. The latest reading which went up by 0.9 from 55.7 registered in November is higher than the series average of 53.2.
Commenting on December’s survey findings, Jibran Qureishi (in featured photo), Regional Economist E.A at Stanbic Bank said: “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 explains that this suggests that underlying demand has significantly improved and perhaps also justifies the MPC maintaining a hawkish bias in light of these risks that could feed through into core inflation.
According to the survey findings, crucial to the latest improvement in the health of the private sector was a rise in new business, which companies linked in turn to stronger client demand and higher customer numbers. This in turn led firms in Uganda to raise their business activity accordingly.
In order to support this expansion, companies increased their staffing levels, purchasing activity and inventories during the month. Four of the five broad sectors covered by the survey saw employment rise, the exception being construction.
Stanbic Head of Fixed Income Benoni Okwenje said “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”.
As has been the case throughout the 31-month survey so far, output prices increased during December. Respondents indicated that they had looked to pass on higher input costs to their customers, with an improving demand environment helping in this process.
The survey, sponsored by Stanbic Bank and produced by IHS Markit, has been conducted since June 2016 and covers 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.