Private sector players predict higher growth in 2026

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Ugandan firms have expressed optimism about output growth in 2026, supported by expectations of stronger demand and increased investment in advertising and customer outreach.

According to the latest Stanbic Purchasing Managers Index (PMI), this broad-based confidence suggests that, despite cost pressures, the private sector entered the new year with momentum and cautious optimism about sustained economic expansion.

The Stanbic PMI, compiled by S&P Global, is based on responses from about 400 purchasing managers across key sectors, including agriculture, mining, manufacturing, construction, wholesale and retail trade and services.

Survey results

The survey says that Uganda’s private sector closed 2025 on a strong footing, with business conditions continuing to improve in December 2025 amid sustained growth in output and new orders.

The data points to resilient consumer demand, expanding commercial activity and growing optimism among firms as they look ahead to 2026.

The survey results, released by Christopher Legilisho, an economist at Stanbic Bank, noted that the December performance underscores a steady recovery trajectory for Uganda’s private sector through much of 2025.

“Conditions in Uganda’s private sector were positive and remained in expansion territory in December, implying that strong consumer demand drove new orders and boosted output,” he said.

He added that the state of employment was healthy, with staffing levels broadly steady following a ten-month period of growth, while backlogs mounted due to capacity pressure from increasing orders.

On employability

Employment levels, however, were broadly unchanged during the month. After ten consecutive months of job creation, firms largely maintained existing staffing numbers in December, signalling a pause rather than a reversal in hiring trends.

Where workforce numbers increased, survey respondents said this was mainly due to the use of temporary workers to manage rising workloads. “The combination of strong order inflows and stable employment contributed to an accumulation of backlogs, highlighting capacity pressures within parts of the private sector.” It, however, pointed out that input cost pressures remained a key challenge.

On inflation

Overall, input price inflation was sustained in December, driven by higher purchase costs. Firms cited elevated water and electricity tariffs, rising construction material prices and higher sugar costs as major contributors to increased operating expenses,” further reads the survey report.

While wage bills were broadly flat, these non-labour costs pushed total expenses higher. Legilisho noted that higher input prices were a significant feature of the December data.

“The rise in input prices was linked to elevated water and electricity costs, as well as concerns around construction expenses. Output prices increased due to robust customer demand, suggesting the economy is performing briskly,” he said, adding that official growth data is expected to confirm this momentum.

He added that with demand conditions remaining favourable, many businesses passed on higher costs to customers through increased selling prices, a trend often observed during the festive season when consumption is typically strong.

“Despite longer supplier delivery times caused by increased demand for inputs, firms were able to expand purchasing activity and rebuild inventories.”

2025 key points

1. Purchasing Managers Index (PMI) rose slightly to 54.0 in December 2025, up from 53.8 in November of the same year, marking the eleventh consecutive month of improving business conditions. A PMI reading above 50.0 signals an expansion in private sector activity, while a reading below that threshold indicates contraction.

2. Expansion in output and new orders remained the main drivers of growth. New business has now increased continuously since February 2025, with firms reporting improved demand conditions and a rise in client numbers.

3. Sustained demand enabled companies to boost production levels and, in many cases, raising selling prices notably in December 2025, where results reflected an upbeat operating environment