Private sector output in Uganda eased slightly in the last month of 2019, although it maintained a strong growth trajectory, data from global research firm IHS Markit showed on Monday.
The Stanbic Bank Uganda Purchasing Manager’s Index (PMI), which measures activity in the private sector, posted 57.7 in December, down from November’s 48-month high of 58.6 .
Nonetheless, the reading was the second-highest recorded in five months and reflected a further improvement in business conditions. It was also above the average since the series began in 2016.
A reading above 50 on the index indicates expansion in private sector activity while below indicates contraction.
Growth in output and new orders stayed strong and was attributed to successful marketing strategies. Of the five surveyed sectors, only agriculture reported a decline in output.
Companies also reported a rise in employment and purchasing activity, which they attributed to efforts to fulfil orders on time.
However, suppliers delivery times increased for the first time in the series history, which was largely blamed on delays caused by heavy rains that made roads difficult to navigate.
Input costs continued rising, driven by higher purchase prices, staff costs and utility bills. In response, businesses raised output prices, keeping with a trend observed throughout the survey’s history.
Commenting on the report, Jibran Qureishi, regional economist for East Africa at Stanbic Bank’s global markets unit, said that “firms looked to pass on higher costs to consumers, which would perhaps suggest that they’re confident enough that consumer demand is solid enough to sustain these price increases.”
He added: “Looking ahead, key events such as the timing of the final investment decision on oil will be key for growth in addition to how the weather outlook impacts the agrarian sector which has been relatively subdued for the most part of 2019.”
