Private sector expands in September

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Uganda’s private sector sustained its growth momentum in September, with the Stanbic Bank Uganda Purchasing Managers’ Index (PMI) rising to 54.0 from 53.3 in August, signalling an eighth consecutive month of improving business conditions.

A reading above 50.0 mirrors expansion, while anything below signals deterioration. The September data points to continued resilience in business activity, even as inflationary pressures persisted.

“Private sector momentum kept the pace in September, with robust consumer demand elevating new orders and output alike,” said Christopher Legilisho, Economist at Stanbic Bank.

“Businesses remain hopeful about future activity, with sales and consumers expected to hold up over the next 12 months. Hiring was sustained, and backlogs broadly unchanged, thanks to job growth in 2025 thus far.”

Stronger demand underpinned the latest expansion. Firms reported greater new business inflows, attributing them to favourable market conditions and rising customer numbers. This drove up activity across agriculture, mining, manufacturing, construction, wholesale, retail, and services, the sectors covered in the monthly survey of about 400 firms.

The sustained increase in orders spurred companies to expand both input purchases and staffing levels, with many panellists citing temporary hires to meet demand. Employment growth helped keep backlogs steady, suggesting firms are managing workloads effectively despite heightened activity.

While growth strengthened, businesses continued to face rising costs. Prices for key inputs such as cement and paper products climbed in September, while wage bills also ticked higher in line with increased hiring. This combination drove another round of cost inflation across most sectors.

To offset the squeeze, firms raised their output charges for the thirteenth straight month, passing on higher expenses to customers. “Inflationary pressures remained in September; as purchase prices, wages and output charges rose due to sustained strong consumer demand,” Legilisho noted.

September also saw an improvement in supplier performance. Shorter delivery times allowed firms to increase their inventories for the seventh successive month, with many respondents citing stock-building in anticipation of continued demand growth.

The Stanbic PMI is a composite index, combining data on new orders (30%), output (25%), employment (20%), suppliers’ delivery times (15%) and stocks of purchases (10%).

Despite rising costs, firms remain upbeat. Respondents expressed confidence that the growth momentum will carry through into the coming year, underpinned by strong consumer demand and favourable business conditions.

Uganda’s PMI results suggest that the private sector is ending the third quarter on a solid footing, balancing stronger demand and employment with the ongoing challenge of inflation.