The second COVID-19 lockdown is the reason behind a sharp drop in business activities in June. The risk of extending the COVID-19 lockdown could delay rebound in economic activity Kampala, Uganda | JULIUS BUSINGE | Uganda’s private sector activity slowed in June, the second time in a row, with businesses forecasting a dejected outlook for the few months ahead as a result of the ongoing second COVID-19 lockdown.
The latest monthly Stanbic Purchasing Managers’ Index (PMI) dropped to 34.9 in June, down from 56.5 in May attributed to government’s COVID-19 lockdown measures that were announced during the month to tame the sky-rocketing numbers of COVID-19 positive cases. In April, PMI stood at the 57.8.
The index reading signalled a deterioration in business conditions for the first time in five months, and was below the series average of 52.8.
Sponsored by Stanbic Bank and produced by IHS Markit, the monthly survey involves a questionnaire to some 400 purchasing managers and has been conducted since June 2016.
It covers the sectors of agriculture, industry, construction, wholesale & retail and services. The headline PMI figure provides an early indication of operating conditions in Uganda.
It is a composite index, calculated as a weighted average of five individual sub-components composed of 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.
According to the June index, the imposition of a 42-day lockdown to try and slow the spread of the COVID-19 pandemic impacted negatively on business conditions across the private sector.
Falls were seen in output, new orders and employment, while companies lowered their selling prices to try and attract business.
Falling customer numbers meant a lack of new orders, while business activity also declined. Reductions in output and new orders were seen across each of the five sectors covered by the survey.
Ronald Muyanja, the head of trading at Stanbic Bank Uganda said, with workloads down amid the lockdown, companies scaled back their employment and purchasing activity, in both cases for the first time in five months. He said reduction in employment meant that staff costs also fell.“Restrictions on travel meanwhile resulted in longer suppliers’ delivery times, lower input buying and delays in the delivery of materials fed through to a reduction in inventories,” he said.Meanwhile, companies lowered their selling prices as part of efforts to attract […]
