Kampala, Uganda – Uganda’s private sector experienced a decline in business conditions in January, marking a slow start to 2025.
The Stanbic Purchasing Managers’ Index (PMI) dropped to 49.5 in January, down from 53.1 in December, indicating a deterioration in private sector operating conditions.
“Surprisingly, the Ugandan PMI eased in January as new orders and output reflected subdued consumer demand,” said Christopher Legilisho, Economist at Stanbic Bank. “The private sector may well have lost momentum in January.”
The decline in new orders was largely centered in the service sector, while the decline in output was broad-based across all sectors. However, quantities purchased increased, and inventories and supplier delivery times improved due to optimism about future output and efficiency gains by vendors.
Input costs rose due to higher utility bills and purchase prices for staple products, leading to an increase in output prices. This implies a slight rise in inflationary pressures in January.
Despite the downturn in business conditions, private sector firms remain upbeat about the business outlook for the next 12 months, with business confidence positive in all sectors amid hopes of stronger demand conditions in the coming months.
The decline in business conditions is a concern for Uganda’s economy, which has been experiencing sluggish growth in recent years. The government will need to implement policies to boost economic growth and support the private sector.
The Ugandan shilling has been under pressure in recent weeks, depreciating against the US dollar. This has increased the cost of imports and added to inflationary pressures.
The next few months will be crucial for Uganda’s economy, and policymakers will need to take decisive action to support growth and stability.
