Stanbic Purchasing Managers Index: Rising Workloads Lead to Continued Employment Growth

The Stanbic Purchasing Managers Index (PMI) for the month of April has indicated that there was continued improvements in customer demand and business activity, with job creation recorded in Uganda as a result. Overall workloads increased meaning companies had to take on extra staff. The report further indicates that employment has risen in each of the 35 months of data collection so far, and all five broad sectors registered an increase in the latest survey period.

The headline PMI in April registered at 54.7, up from 51.7 in March and posting above the 50.0 no-change mark for the twenty-seventh successive month.

Jibran Qureishi, Regional Economist E.A at Stanbic Bank said, “The PMI continues to indicate that the private sector remains in a good place. Despite unfavorable weather conditions, the PMI rose in April. Moreover, the ongoing trade dispute with Rwanda has also not hampered private sector activity that drastically, perhaps due to other markets such as South Sudan increasing demand for Uganda’s exports. This diversity in Uganda’s trade mix should underpin its resilience.”

Further, there were input cost increases that led to companies raising their output prices accordingly.

Stanbic Fixed Income Manager Benoni Okwenje said, “Both output and new orders continued to increase during April. In line with the headline PMI, the rises in both activity and new business were the twenty-seventh in as many months. Businesses pointed to the securing of new customers, thereby driving new order growth. Improved customer demand and marketing efforts subsequently contributed to higher output. In contrast to the picture for total new business, new export orders decreased amid issues on the border with Rwanda. Increases in new work was however evident from other sources.”

The report further indicates an increase in cost burdens. Both purchase prices and staff costs rose, the former due to higher prices for materials including baking powder, cement, maize and stationery. In addition, electricity and water bills were higher in the period under survey.

“Purchasing activity rose for the fourteenth consecutive month helping to support a rise in inventories following a decline in March. This was attributed to stock building to higher workloads and positive demand forecasts,” Okwenje concluded.

The 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 a deterioration.

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