Stanbic’s PMI points to consistent economic growth

Kampala, Uganda | JULIUS BUSINGE | Stanbic Bank’s Purchase Managers Index (PMI) posted 51.1% growth in February down from 52% in the previous year, signaling a moderate improvement in business conditions in the private sector.

Commenting on February’s survey finding, Jibran Qureshi, Regional Economist East Africa at Stanbic said, “business conditions in Uganda’s private sector continued to improve, albeit at a more moderate pace last month.

This follows the cut in the Central Bank Rate from 9.5% to 9% by Bank of Uganda which indicated an improvement in economic growth and projected an economic growth of 6% guided by a drop in non-performing loans to 5.6% from 10.5% and a revival in private investment activity.

Benoni Okwenje, the Fixed Income Manager at Stanbic, said the Central Bank’s projections are aligned with this month’s PMI survey which signals an improvement in business conditions.

“Output growth was observed in the industry, services, construction and wholesale & retail sub-sectors,” he said.

“Anecdotal evidence linked the expansion to a number of new projects amid stronger underlying demand. Indeed, new orders rose further mid-quarter, with businesses citing intensive marketing efforts as the driving force.”

In regard to purchasing activity, Benoni said purchasing activity contracted for the first time in nine months due to delay in payments prohibiting purchases.

The Stanbic’s 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% signal an improvement in business conditions on the previous month, while readings below 50% show deterioration.