Christopher Legilisho, an economist at Stanbic Bank
Uganda’s private sector maintained its growth momentum in September, despite a slowdown in business activity, with stronger demand, advertising and improved product quality supporting new orders.
The latest Stanbic Purchasing Managers’ Index (PMI), compiled by S&P Global, shows that business conditions remained firmly in expansion territory during the month, although the headline index fell to 53.0 in September from 55.0 in August.
A PMI reading above 50.0 indicates an improvement in business conditions from the previous month, while a reading below 50.0 points to deterioration.
The September reading also marked a continued improvement in the overall health of Uganda’s private sector since February 2025.
Christopher Legilisho, an economist at Stanbic Bank, said the September PMI remained in expansionary territory, although the latest reading was significantly lower than its six- and 12-month trends.
“New orders and output remained resilient, consistent with favourable demand conditions, while employment increased across most sectors except services,” Legilisho said.
He added that rising backlogs, driven by stronger demand and payment delays, showed that firms were increasingly facing capacity and working capital constraints.
According to the survey, many businesses attributed increased activity to stronger new order inflows and successful advertising campaigns. New sales also increased at the end of the third quarter, with companies reporting that sustained demand and interest generated by promotional activities helped boost new business.
The monthly PMI is based on questionnaires sent to purchasing managers across agriculture, mining, manufacturing, construction, wholesale, retail and services.
The index is calculated from five key indicators: New Orders, which carry a 30 per cent weight; Output, 25 per cent; Employment, 20 per cent; Suppliers’ Delivery Times, 15 per cent; and Stocks of Purchases, 10 per cent.
At sector level, growth in new orders was broad-based during September. However, agriculture and wholesale and retail businesses recorded declines in output.
Legilisho said businesses also faced growing supply-side pressures as increased transport and logistics costs strained supply chains.
“Firms responded by increasing purchasing activity and building inventories in anticipation of sustained demand, providing a buffer against potential disruptions but also increasing exposure to elevated input costs,” he said.
Operating costs continued to rise, mainly due to higher utility, fuel and transportation expenses, while some companies also reported increased wage bills. Overall input costs increased across all five monitored sectors.
With demand remaining favourable while input costs increased, companies sought to recover some of the additional expenses by raising selling prices. Output charges increased in all sectors except construction, where prices declined.
The stronger flow of new orders and pressure on business capacity also encouraged companies to increase recruitment in September.
The survey indicated that both temporary and permanent workers were hired during the month, although employment in the services sector did not increase.
Meanwhile, backlogs of work increased for the fourth consecutive month, with some businesses saying delayed payments affected their ability to process incoming orders.
Companies also increased their purchases of inputs during September to meet higher business requirements. Some firms increased stocks in anticipation of stronger orders in the coming months.
Inventories consequently rose for the 19th consecutive month.
However, supplier performance deteriorated again during the month, with businesses reporting delays in international transportation and increased fuel costs.
Overall, the September PMI suggests that Uganda’s private sector continues to expand, although rising operating costs, payment delays and supply-chain pressures remain key challenges for businesses.
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