Having had a tough session in the embryonic stages of the year, East African country Uganda has come out of the comfort zone to lifts its economical status. According to the latest Stanbic Bank Purchase Managers Index (PMI), business conditions have been on the rise from 52.8 in June to 54.3 in July courtesy of more jobs being created and rainfall for the plantations.
“The recent recovery is underpinned by the agriculture sector following the relatively decent long rains. That being said, the manufacturing and retail sectors are still sluggish, but are likely to gradually recover as access to credit improves over the course of the year. In addition to this, government expenditure on public infrastructure projects is also likely to support economic activity over the near to medium term,” Jibran Qureishi, the Regional Economist East Africa at Stanbic Bank said mid-week.
The index posted above the neutral 50.0 threshold for the sixth consecutive month, supported by expansions in new orders, output, employment and stocks of purchases. Offsetting the declines seen in June, the agriculture and
construction sectors returned to expansion territory.
Analysing the performance of some of the other key sectors in Uganda’s economy Anne Juuko Stanbic Bank’s Head of Global Markets said, “Growth in the industry and service categories was maintained in July. However, the wholesale & retail sector recorded no change in business conditions, following a contraction in June.”
The Stanbic PMI 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 deterioration.
Looking at overall employment Juuko said, “The ongoing upturn in output continued to feed into the labour market, as employment growth in four of the five monitored sub-sectors more than offset a reduction in staffing levels in the wholesale & retail sector.”
The Stanbic PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in approximately 400 private sector companies, which have been carefully selected to accurately represent the true structure of the Ugandan economy, including agriculture, construction, industry, services and wholesale and retail.