Stanbic PMI reports low demand for March

Kampala, Uganda | THE INDEPENDENT | Ugandan private sector firms have registered a deterioration in business conditions during March, thereby ending a 16-month upward improvement sequence in the health of the private sector.

The overall decline was driven by renewed contractions in output and new orders, as customer demand was reportedly hampered by less money in circulation and reduced purchasing power, the PMI index report reads in part.

Nonetheless, firms remained confident that business activity will increase over the next months, with employment and input buying rising further. Despite an improvement in lead times for inputs, greater demand for materials and rising employment led to an increase in overall cost burdens. At the same time, firms continued to raise their selling prices.

According to Christopher Legilisho, a senior Economist at Stanbic Bank, the headline PMI fell to 49.3 in March, down from 51.7 in February, signalling a decline in the health of the Ugandan private sector at the end of the first quarter. The downturn in business conditions was the first since July 2022.

“The streak of strong activity in Uganda’s private sector tailed off in March. Output and new orders declined due to reduced money supply weighing on consumer demand. Only the industrial sector recorded growth. Still, Ugandan firms increased staffing levels for a twelfth month running, particularly in agriculture and services. However, construction and industry shed jobs in March. Backlogs nevertheless improved further in March as fewer orders allowed firms to clear outstanding work.” Legilisho said.

Legilisho further highlights that Ugandan private sector firms remained upbeat in their expectations regarding the outlook for the year-ahead. Confidence in future business activity was broad- based by sector.

The report expounds deeper on the five monitored sectors, agriculture and services saw a rise in employment. Meanwhile, construction and industry recorded a fall in staffing numbers, while wholesale & retail saw headcounts unchanged on the month.