But players expect recovery due to easing of COVID-19 lockdown measures Kampala, Uganda | JULIUS BUSINGE | Business captains are optimistic that activity will rebound once lockdown restrictions are lifted by government, according to the July Purchasing Managers’ Index (PMI).
Experts expect opportunities in form of new jobs and economic expansion as long as the government cautiously manage the current COVID-19 pandemic catastrophe.
Sponsored by Stanbic Bank, the monthly survey involving some 400 respondents is produced by IHS Markit and has been conducted since June 2016. The survey agriculture, industry, construction, wholesale/retail and the services sectors.
The latest survey indicates that the recently concluded nationwide 42-day lockdown intended to lessen the spread of a second wave of the Covid-19 pandemic across Uganda added to the continued economic slowdown.
The headline PMI slipped to 34.6 in July, down from 34.9 recorded during June. This is the second successive decline in business conditions since the lockdown was enforced on June 18.
The latest reading is well below the series average of 52.5. Output, new orders and employment were all down for the second successive month.
Ronald Muyanja, the head of trading at Stanbic Bank Uganda said “a reduction in prices was noted for the first time in 14 months.
Companies lowered their selling prices amid weak demand. Although on a more positive note, firms were optimistic that activity will rebound once lockdown restrictions are lifted”.
The headline figure derived from the survey is the Purchasing Managers’ Index (PMI) which provides an indication of operating conditions in Uganda. It 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 a deterioration.
Muyanja added that the recent Covid-19 lockdown resulted in further reductions in both output and new orders, with more than half of all respondents signalling declines in each case.Output decreased across each of the agriculture, construction, industry, services and wholesale/retail categories.In line with falling workloads, companies also scaled back their employment and purchasing activity for the second consecutive month.Although transportation costs were up, panellists indicated that this was outweighed by lower charges for utilities, falling purchase prices and a reduction in staff costs resulting into a decline in overall input costs.With input costs decreasing and demand weak, companies lowered their selling prices, the second […]